OYO turns cash flow positive for first time in Q4 FY23

Hospitality tech firm Oyo turned cash flow positive for the first time in Q4 of FY23. Founder and Group CEO Ritesh Agarwal shared the update with OYO employees addressing a town hall virtually on Thursday, sources told PTI.

The company is anticipated to end the quarter with nearly Rs 90 crore surplus cash flow, sources said, attributing the increase in bookings across all key geographies, especially in the Europe homes business that is witnessing unprecedented advance bookings both for the upcoming summer season peak and the relative off-season period from November to March.

The company's last reported treasury or cash corpus on the balance sheet is around Rs 2,700 crore.

In a presentation shared in the town hall, Agarwal informed that OYO is expected to clock an adjusted EBITDA of nearly Rs 800 crore for FY24.

In March, OYO refiled its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) under the recently introduced pre-filing route.

The hospitality brand has reportedly reduced the number of shares it plans to sell in its public market debut by two-thirds, which will result in a decrease in the amount of fresh capital it was expected to raise.

The move is said to have been made due to the decline in technology stock valuations in the current market. OYO had filed for an Initial Public Offering (IPO) of Rs 8,340 crore ($1.1 billion) with the SEBI in October 2021, at a valuation of $10 billion.

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The IPO included a primary capital raise of around Rs 7,000 crore, and investors selling shares worth Rs 1,430 crore. SoftBank, which holds a 46% stake in OYO, planned to sell shares worth Rs 1,328.53 crore at the time.

However, in May 2022, OYO requested to defer the IPO to a later date at a lowered valuation of an estimated $7 billion, after SoftBank cut the valuation of its investment in the company down to $2.7 billion in September 2022.

OYO is said to be filing a fresh document for its IPO this week, with a reduced offer-for-sale of shares. The current investors in the company are not expected to sell their shares as part of the IPO, according to anonymous sources.

Founded in 2015 by Ritesh Agarwal, OYO reached a peak valuation of $10 billion in June 2019 when Agarwal bought $2 billion worth of the company’s shares from Sequoia and Lightspeed Venture Partners, borrowing the sum from Japanese lenders in his personal capacity. As a result of the purchase, Agarwal held a 33% stake in the company. The company last raised $5 million in a Series F round from Microsoft in September 2021.

(With inputs from PTI)