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Business News/ Companies / Start-ups/  As travel rebounds, Oyo checks in its first full-year net profit

As travel rebounds, Oyo checks in its first full-year net profit

Founder Ritesh Agarwal said on X that the travel and hospitality company had recorded its eighth consecutive quarter of positive EBITDA in the three months ended March

Oyo is eyeing an IPO after completing the refinancing of its $450-million loan.Premium
Oyo is eyeing an IPO after completing the refinancing of its $450-million loan.

BENGALURU:Oyo has reported its first full-year net profit in its 12 years of existence, scoring its second victory this week following a vote of confidence from Fitch as the hospitality chain rides a resurgence in travel.

Weeks after withdrawing its draft initial public offering papers, Oyo's founder Ritesh Agarwal said on social media platform X that the company had made a profit after tax of nearly 100 crore in 2023-24. Oyo had reported a loss of 1,286.5 crore for FY23.

Oyo, owned by Oravel Stays Pvt. Ltd, is yet to officially file its financials for FY24 and the March quarter.

Earlier this week, ratings firm Fitch upgraded its long-term foreign and local currency issuer default ratings for the SoftBank-backed Oyo to ‘B’ from ‘B-’, with a ‘stable’ outlook.

Also read | General Atlantic, Norwest eye stake in Oyo

“I see growth ahead not just in India with emerging travel trends such as premiumization, spiritual travel, business travel and conferences, destination weddings but also in our other key markets of Nordics, South East Asia, US and UK," Agarwal, who's the group chief executive, said in a post on X on Thursday, signalling optimism for continuing growth in the ongoing financial year as well.

Improved cash flows

Oyo recorded its eighth consecutive quarter of positive EBITDA in the three months ended March period, Agarwal said on X, without disclosing the numbers. 

Oyo currently has cash balances amounting to 1,000 crore, Agarwal added, stating that while the numbers are provisional the audited financials are likely to be close to these figures.

EBITDA, or earnings before interest, tax, depreciation, and amortisation, is a key measure of operational efficiency.

Fitch, in its latest update, also upgraded its rating on Oyo’s $660 million senior secured term loan facility, with an outstanding $448 million due in 2026, to ‘B’ from ‘B-’, citing the company’s improving financial profile, driven by EBITDA growth and a recent $195 million debt buyback.

The term loan facility was issued by Oyo’s fully owned subsidiary, Oravel Stays Singapore.

“The global credit rating firm Fitch has also taken note of our improved performance and strong cash flows, upgrading our credit rating," Agarwal said in his post.

OYO’s adjusted EBITDA improved to 888 crore in for 2023-24, up from 274 crore in FY23, according to a person in the know.

IPO after refinancing

The travel and hospitality firm founded in 2012 is eyeing a public listing after completing the refinancing of its $450-million loan through the issue of dollar bonds. 

JP Morgan is expected to be the lead banker for the refinancing at an expected interest rate of 9-10% annually, as per a PTI report.

Oyo initially filed its preliminary IPO documents with the Securities and Exchange Board of India in September 2021 to raise 8,430 crore through the public offering, which was to include a secondary offering of 1,340 crore. 

Sebi, however, returned Oyo’s draft papers months later, requesting several updates.

Also read | Travel firms, hotels see a demand surge on pilgrimage circuit

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Sowmya Ramasubramanian
Sowmya is a Senior Correspondent at Mint. An alumnus of Asian College of Journalism, Sowmya is deeply interested in covering sectors at the intersection of consumer and technology as well as healthcare and the venture capital ecosystem. Previously, Sowmya worked for the editorial team at YourStory. Her earlier stints include long form journalism at The Morning Context and technology reporting at The Hindu in Chennai.
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Published: 30 May 2024, 02:16 PM IST
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