Founded in 2012 as Oravel Stays and later rebranded as OYO IPO, this dynamic Indian startup has swiftly emerged as a prominent player in the hospitality industry. With a vision to offer affordable yet enhanced guest experiences, OYO entered India’s hospitality landscape with a fresh perspective. The inception of the idea traces back to 2011 when Ritesh Agarwal, the visionary founder, identified the scarcity of quality budget accommodations across India.
Inception and Growth
Ritesh Agarwal’s vision for standardization led to the birth of OYO Hotels and Homes (formerly Oravel Stays). The company’s debut was swiftly followed by substantial funding from global venture capital heavyweights, amounting to approximately $4.1 billion across 21 funding rounds until 2021. Among the notable investors are industry giants like SoftBank Group, Greenoaks Capital, Lightspeed India, and Sequoia Capital.
A Global Journey
Over the past decade, OYO has successfully expanded beyond India’s borders, establishing a significant presence in Japan, South-East Asia, the USA, and Europe. Simultaneously, its footprint within India has experienced exponential growth.
OYO Hotels and Homes IPO: Ambitions and Objectives
The upcoming OYO IPO and Hotels and Homes Initial Public Offering (IPO) serves several key objectives:
- Debt Management: The OYO IPO aims to prepay or repay debts incurred by various subsidiaries.
- Growth Initiatives: Funding from the OYO IPO will support both organic and inorganic growth endeavors.
- General Corporate Needs: The proceeds will cater to general corporate requirements, facilitating sustained operations.
- Stakeholder Engagement: The offer for sale is designed to involve participating stakeholders in the OYO IPO process.
Insights into the IPO
As per OYO IPO and Hotels and Homes’ Draft Red Herring Prospectus (DRHP) filed with SEBI, the anticipated value of the public issue is around Rs. 8,430 crores. This encompasses a Rs. 1,430 crore offer for sale and a fresh equity share sale of Rs. 7,000 crores. While finer details such as the price band and market lot remain undisclosed, it’s important to note that the allocation breakdown across different shareholder segments is also not publicly available.
Leading the OYO IPO Process
The role of book running lead managers for this IPO is fulfilled by esteemed entities:
- ICICI Securities Limited
- Kotak Mahindra Capital Company Limited
- JM Financial Limited
- Citigroup Global Markets India Private Limited
- J.P. Morgan India Private Limited
- Deutsche Equities India Private Limited
- Nomura Financial Advisory and Securities (India) Private Limited
Furthermore, the IPO’s registrar is Link Intime India Private Limited.
Reasons to Consider the OYO Hotels and Homes IPO
Investing in the OYO IPO Hotels and Homes IPO presents compelling reasons:
- Resilience Post-Pandemic: Despite weathering the financial challenges posed by the COVID-19 pandemic, OYO IPO is on a trajectory of recovery. Its innovative business approach aims to streamline operations by divesting non-performing segments, fostering enhanced returns.
- Strategic Partnerships: OYO’s collaboration with Microsoft signifies its dedication to technological advancement. The infusion of funds and the development of an operating system geared towards hospitality businesses demonstrates a commitment to operational efficiency.
- Stakeholder Trust: OYO IPO has maintained stakeholder confidence despite recent legal and financial issues, reflecting its stability and resilience.
- Robust Brand Value: OYO’s enduring brand value remains a potent force, with the IPO targeting a valuation of $10 billion.
IPO Financials
| Financial year | Profit After Tax | Total Assets | Total Income | Total Expenses |
|---|---|---|---|---|
| March 2021 | Rs. 39,438.44 | Rs. 87,510.48 | Rs. 41,573.86 | Rs. 69,360.75 |
| March 2020 | Rs. 1,31,227.77 | Rs. 1,41,089.82 | Rs. 1,34,132.68 | Rs. 2,28,001.20 |
| March 2019 | Rs. 23,645.32 | Rs. 1,17,426.08 | Rs. 65,184.57 | Rs. 88,094.28 |
Know before investing
| Strengths | Risks |
| OYO’s expansion has been one to take note of. From one city of India to a vast network covering South-East Asia, Europe, and the USA. Based on the customer demands, the company has increased its network. |
Different brands are also entering this segment of budget hotels, which will bring strong competition to OYO.
|
| OYO’s expansion has been one to take note of. From one city of India to a vast network covering South-East Asia, Europe, and the USA. Based on the customer demands, the company has increased its network. |
Apart from their OYO Rooms, other ventures of the company did not bring enough success.
|
| OYO Hotels and Homes have led the segment with its innovation. They were the pioneers of budget stays in India and implemented this concept successfully. Also, after the recent turbulence, they have devised a change in a business plan to save the company. |
Since the base of OYO has been budget stays; the profit margins have consistently remained low.
|
|
The company has been in a tussle with hotel owners and other associated parties over the revenue share. This has also hampered its operations significantly.
|
In conclusion
The upcoming OYO IPO offers a compelling opportunity to invest in a company that has weathered challenges, forged strategic partnerships, maintained stakeholder faith, and retained a strong brand reputation.
Keep reading and supporting Banknomics!
