OYO pre-files draft paper for IPO; likely to list around Diwali

Oravel Stays - which operates hospitality tech firm OYO - on Friday pre-filed its Draft Red Herring Prospectus with stock market regulator Sebi, sources said.

Sources close to the company told PTI, OYO may launch its initial public offering (IPO) around Diwali this year.

Unlike the traditional route where companies have to launch the IPO within 12 months from the Sebi approval, or final observation; in the pre-filing route, an IPO can be floated within 18 months from the date of Sebi's final comments.

This route also provides flexibility to change primary issue size by 50 per cent till the Updated Draft Red Herring Prospectus (UDRHP) stage.

Explaining the rationale for filing through the pre-filing route, a source said, "The market continues to be highly volatile globally and to an extent in India as well.

"Filing through the pre-filing route will give OYO some leeway on the timing of the listing, as well as on fine-tuning the issue size, basis the market conditions, to between $400 to 600 million, all of which will now be a primary issuance, to repay most of its debt.

"Though for now an issue timing of around Diwali is likely once Sebi approves."

OYO's last submission to the Securities and Exchange Board of India (Sebi), in November 2022, was of its updated financial results for the first half of financial year 2022-23, claiming that potential investors need to be made aware of the material uptick in its business performance since its initial IPO application in September 2021.

The company's founder Ritesh Agarwal, in an employee townhall on Monday, said, "The company expects to clock adjusted EBITDA of nearly Rs 800 crore in FY2024, that is, the upcoming financial year.

"We are taking measures to keep a healthy cash runaway and continuing to operate in a cost-effective way.

"We have a current cash balance of approximately Rs 2,700 crore and we hope we will end up consuming very little of it for existing operations.

"Our cash flow has shown improvement and our reliance on external funds has gradually decreased overtime."

He also mentioned that this performance can be attributed to sustained growth in India, Indonesia, the US and UK and relevant optimisation as well as synergies in its European vacation homes business.

OYO had filed preliminary documents with the Sebi on September 2021 for a Rs 8,430-crore IPO, including a fresh issue of equity shares aggregating up to Rs 7,000 crore and an offer for sale of Rs 1,430 crore.