Home / Markets / Ipo /  IPO-bound OYO's valuation dips in private market after reported markdown by SoftBank

The valuation of IPO-bound OYO in the private market has dipped to around $6.5 billion, reported news agency PTI, after reports suggested that SoftBank Group Corp has slashed the valuation of Oyo Hotels on its books by more than 20%.

Oyo disclosed its latest financials in an IPO filing addendum last month, with the numbers showing narrower losses and a rebound in sales for the year through March 2022 and the following three months.

Oyo's share price in the private market had risen to 94 per share, however, in the subsequent days following reports of the markdown of OYO's valuation by SoftBank, the company's valuation dipped by nearly 13 per cent to 81 per share, as per PTI.

The company's losses nearly halved for the year through March 2022. Meanwhile, Oyo's revenue from operations rose 21% to 4,781.4 crore in financial year 2022 from 3,961.6 crore in 2021.

The company's adjusted gross profit margin improved from 9.7% in fiscal 2020 to 33.2% in fiscal 2021 along with approximately 79% reduction in its EBITDA losses from fiscal 2020 to 2021. EBITDA further narrowed and reported its maiden positive during the first quarter of the current fiscal.

When it filed the draft prospectus for its initial public offer, OYO was initially looking at a valuation of around $10 billion but later on prepared to settle for a lower valuation at around $7-8 billion. 

In October last year, Oyo had filed its draft red herring prospectus (DRHP) for its initial public offering (IPO). The company's proposed issue comprised a fresh issue of equity shares aggregating up to 7,000 crore and an offer for sale to the tune of 1,430 crore, as per its DRHP.

Oyo, formally known as Oravel Stays Ltd, was founded in 2012 by Ritesh Agarwal. The company is now targeting an initial share sale in early 2023 provided that India’s stock market continues to hold up and economic conditions improve, as per a Bloomberg report.

The startup is now focusing on four main regions: India, Malaysia, Indonesia and Europe, where it manages vacation homes and has cut down operations in markets it previously considered crucial, such as the US and China.

(With inputs from PTI, Bloomberg)

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