Fitch Ratings on Monday announced it has upgraded the rating of OYO parent firm Oravel Stays, citing the hospitality company's improved financial profile. Fitch upgraded Oravel Stay's long-term foreign and local currency issuer default ratings to 'B' from 'B-' with a 'Stable' outlook, according to a statement. It has also upgraded the rating on the $660-million senior secured term loan facility due 2026 to 'B' from 'B-'.
Fitch upgraded Oravel Stay's long-term foreign and local currency issuer default ratings to 'B' from 'B-' with a 'Stable' outlook, according to a statement. It has also upgraded the rating on the $660-million senior secured term loan facility due 2026 to 'B' from 'B-'.
"The upgrade reflects our estimate that OYO's EBITDA leverage will improve to below 5x on sustained EBITDA growth amid cost savings, a demand recovery in the short-term stay market and OYO's buyback of $195 million in debt in November 2023," Fitch stated.
This upgrade comes shortly after OYO reported a net profit of nearly Rs 99.6 crore ($12 million) in 2023-24, Founder Ritesh Agarwal told employees in a townhall last week.
"OYO's liquidity is adequate due to a sufficient cash balance and our expectation of positive free cash flow from the financial year ending March 2025 (FY25)," Fitch stated.
OYO had recently concluded a debt buyback of $195 million (Rs 1,620 crore).
Fitch has also highlighted OYO's adequate liquidity position, with around $95 million in unrestricted cash as of March 2024, higher than their post-debt buyback expectation of $80-90 million.
"We believe OYO's improving profitability and declining leverage should support its ability to refinance the debt in a timely manner," Fitch stated.
The rating agency said it expects travel and tourism industry conditions to continue to improve in OYO's key end-markets in FY25.
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