OYO Confirms No Plans to Withdraw IPO Papers Despite Regulatory Hurdles

In a recent development, Oravel Stays Ltd, the company behind the popular OYO brand, has clarified that it has no intention of withdrawing its IPO papers from the Securities Exchange Board of India (SEBI). This follows the regulator's decision in 2023 to return the initial IPO filing, requesting OYO to resubmit its draft red herring prospectus with necessary updates and revisions.

According to a report by the Economic Times, discussions are ongoing between Oravel Stays Ltd and private market investors to secure additional funds within the next six to eight months. The company had previously made a confidential pre-filing with SEBI for a smaller-sized IPO, where it was instructed to refile applications with a reduced secondary share sale portion compared to the initial plan.

OYO's ownership structure reveals that SoftBank holds a significant 46% stake in the company, while Ritesh Agarwal, the founder, and CEO, maintains a 33% stake. Notable investors such as Lightspeed and Peak XV Partners are also among the company's backers.

In a related development, the strategic advisor to OYO, Rajnish Kumar, and former chairperson of the State Bank of India, has reportedly resigned from his position. His departure follows the conclusion of his contract in December 2023. Rajnish Kumar is presently the chairman of the board at BharatPe and a member of the advisory council of the edtech firm Byju's, currently grappling with challenges.

Despite these changes, Ritesh Agarwal shared positive financial updates with OYO employees, stating that the company doubled its profit after tax in the third quarter to ₹30 crore. OYO achieved its first profitable quarter in Q2 FY24, recording a profit after tax of ₹16 crore.

Agarwal expressed optimism about the company's future financial performance, anticipating a consistent rise in profit after tax in the upcoming quarters. He attributed this growth to enhanced patron confidence, improved customer experience, and favorable market conditions conducive to sustained expansion.

The entrepreneur also revealed that OYO achieved an adjusted EBITDA of ₹750 crore in FY23 and is poised to reach ₹1,000 crore in FY24, surpassing the earlier projection of ₹800 crore for the fiscal year.