A Deep Dive into the OYO IPO Journey: Delays, DRHP, and What Lies Ahead

Oravel Stays Ltd, widely recognised as OYO, has been on a protracted journey towards its Initial Public Offering (IPO).OYO, established by Ritesh Agarwal in 2012, operates as a leading technology platform within the global hospitality sector. Its core mission involves transforming fragmented, unbranded, and underutilised hospitality assets into branded, digitally-enabled fronts, aiming for higher revenue generation potential. This article will comprehensively unpack OYO's IPO journey, from its initial DRHP filing in 2021 and original objectives to its evolving financial performance and path to profitability. We will examine the multifaceted reasons behind the repeated withdrawals and delays, including regulatory feedback, shifts in investor sentiment, and broader macroeconomic factors.

Table of Contents

1. Introduction: Unpacking the OYO IPO Journey
2. OYO IPO: Current Status and Refiling Plans
3. Initial IPO Ambitions and Objectives
4. Analysing OYO's Financial Performance
5. Key Strengths of OYO's Business Model
6. Strategic Shifts and Future Outlook
7. Conclusion: What Lies Ahead for OYO's Public Debut?

Introduction: Unpacking the OYO IPO Journey

The journey of OYO, officially Oravel Stays Limited, towards its Initial Public Offering (IPO) has been a significant and often discussed topic in the Indian and global startup ecosystem. Initially positioned as one of India's largest public market debuts, OYO's trajectory to becoming a publicly listed entity has been marked by ambitious plans, extensive preparations, and a series of dynamic market and regulatory challenges. This introduction sets the stage for a detailed exploration of the various phases of OYO's IPO endeavour.

The company's path to an IPO has been complex, marked by multiple attempts and subsequent withdrawals of its Draft Red Herring Prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI). This analysis consolidates information from various financial and news sources to offer a comprehensive overview of OYO's trajectory towards becoming a publicly listed entity.

Wrap Up: Understanding OYO's IPO journey offers valuable insights into the complexities of taking a high-profile startup public in a volatile market. It showcases the delicate balance between ambitious growth strategies, the pursuit of sustainable profitability, and navigating stringent regulatory environments. 

OYO IPO: Current Status and Refiling Plans

OYO's anticipated IPO is currently on hold, with no immediate launch date announced. The company has withdrawn its DRHP multiple times, indicating a cautious approach to its public market debut.



The delay in OYO's IPO is primarily due to the strategic necessity of refinancing a substantial $450 million loan. Oravel Stays Ltd, OYO's parent company, withdrew its DRHP from SEBI in May 2024 to facilitate this refinancing, which is expected to be completed by the next quarter through the issuance of dollar bonds led by JP Morgan. This move is crucial for improving the company's financial health and presenting a more favourable profile to potential investors, as the existing debt structure was a significant impediment to its public listing.

Wrap Up: A refiling of the DRHP is anticipated in 2025, or potentially by March 2026, after the loan refinancing is finalised. This demonstrates how managing financial liabilities directly influences a company's readiness for entering the public market.

Initial IPO Ambitions and Objectives

OYO's initial IPO plans aimed to raise a significant sum to address key strategic priorities, particularly its substantial debt.

Initial IPO Objectives and Structure: OYO initially sought to raise up to ₹8,430 crore (approximately $1.1 billion) through its IPO. This was structured with a fresh issuance of equity shares amounting to ₹7,000 crore and an offer for sale (OFS) of ₹1,430 crore.

The primary objectives for the IPO proceeds were:

• Debt Repayment: A substantial ₹2,441.01 crore was earmarked for repaying up to 50% of its Term Loan B, secured by OYO's international subsidiaries.
• Growth and Expansion: ₹ 2,900 crore was planned for organic and inorganic growth initiatives.
• General Corporate Purposes: The remaining capital was for operational flexibility.

For the OFS, SoftBank intended to divest a small portion of its shares, valued at ₹1,328.53 crore, while Global Ivy Ventures and China Lodging Holdings will be selling stakes worth Rs 23.13 crore and Rs 51.62 crore, respectively.

OYO's Initial IPO Issue Details

The category-wise shares offered are as follows:

The approximate valuation of the Oravel Stays IPO company based on its price band and DRHP (prospectus) is: 

Wrap Up: The significant allocation of initial IPO proceeds towards debt repayment, representing nearly 29% of the net proceeds, highlights that reducing its debt burden was a critical and early strategic priority for OYO. This consistent emphasis on debt management, from its initial IPO plans to its most recent DRHP withdrawal, underscores that high debt levels have been a persistent concern for the company's financial stability and its readiness for a public listing.

Analysing OYO's Financial Performance

OYO has made significant strides in its financial performance, moving from substantial losses to reporting a profit in FY24, a crucial development for its IPO aspirations. This notable shift from red to black on its balance sheet indicates a maturing business model and a stronger position for a public listing.

OYO's Financial Performance (FY22-FY24)

Wrap Up: While OYO reported a low profit in FY24, this was largely driven by one-time gains from an acquisition and a financial liability reversal, rather than core operational profitability. The company has also aggressively cut operating expenses, particularly employee costs, to improve its financial position.

Curious how OYO’s financial turnaround compares with other tech-driven listings? Use this IPO dashboard to benchmark its trajectory against peers across sectors.

Key Strengths of OYO's Business Model

OYO's business model incorporates several key strengths that underpin its market position and operational efficiency, making it a significant player in the global hospitality sector.

OYO's Business Strengths

• Market Leadership and Scale: OYO has 157,344 storefronts in over 35 countries (March 2021). It's the largest in India/SEA for hotel storefronts, and second-largest in Europe for home storefronts.
• Strong Partner and Customer Retention: A high percentage of hotel partners (96.5%) actively use the OYO OS platform, and customer satisfaction improved from 30.1% in Q3 2020 to 72.3% by March 2021.
• Asset-Light Business Model: The company doesn't own storefronts, reducing capital expenditure. 99.9% of storefronts operate without minimum guarantees/fixed payouts (March 2021).
• Full-Stack Technology Platform: OYO uses a comprehensive technology platform, offering over 40 integrated solutions via apps like Co-OYO and OYO OS.
• Improved Unit Economics: Unit-level profitability has increased. Contribution Profit rose from 5.1% (FY2020) to 18.4% (FY2021), indicating efficient operations.

Wrap Up: These strengths, particularly its asset-light model, extensive network, and technological integration, contribute to OYO's operational efficiency and improved unit economics, solidifying its market position and resilience.

Strategic Shifts and Future Outlook

OYO has undertaken significant strategic shifts in its business model and operational focus, driven by market demands for profitability and efficiency. These changes are pivotal to its future outlook and public listing prospects.

OYO's Strategic Shifts

• Focus on Sustainable Profitability: OYO is now focused on sustainable profitability, evident in aggressive cost-cutting. It has achieved a PAT of ₹623 crore in FY25 and targets ₹1,100 crore in FY26.
• Geographic and Segment Consolidation: OYO plans to focus its growth efforts on India, Europe, Southeast Asia while pulling back in China and the US. It's expanding "company-serviced hotels," doubling their presence across India.
• Targeted Inorganic Growth: The company acquired K&J Consulting (Checkmyguest Group, Paris) and invested in G6 Hospitality's digital assets in the US.
• Alternative Funding Strategies: Due to IPO delays, OYO raised private funding from HNWIs, family offices, and Ritesh Agarwal's Redspring Innovation Partners to address capital needs.

Wrap Up: These strategic shifts demonstrate OYO's adaptation to market demands, aiming for enhanced profitability and operational efficiency. The reliance on private funding and the founder's personal financial commitments highlight the immediate capital needs and the urgency surrounding the eventual IPO.

There’s a well-researched video by Sagar Sinha explaining how OYO scaled rapidly and why its IPO remains under scrutiny — you should watch it.

Conclusion: What Lies Ahead for OYO's Public Debut?

OYO's protracted IPO journey underscores the complexities faced by high-growth startups aiming for a public debut. The company's repeated DRHP withdrawals, driven primarily by the strategic necessity of refinancing substantial debt, highlight a consistent focus on improving its financial health. This, coupled with a notable shift from aggressive expansion to sustainable profitability and strategic market consolidation, demonstrates a maturing business model.

Looking ahead, OYO's ability to secure the planned refinancing, sustain its recent profitability through operational efficiencies rather than one-off gains, and meet its ambitious future financial projections will be crucial. The founder's significant personal financial commitment to the IPO further adds to the urgency. The coming months will be key in determining if OYO's strategic recalibrations are sufficient to finally pave the way for a successful public listing in the volatile market.

New to IPOs? Learn everything in our simple IPO investment guide – Understand what an IPO is, how to apply, and smart tips for investing with confidence.

FAQs

1. Why has the OYO IPO been repeatedly delayed?

The OYO IPO has faced multiple delays primarily due to the company's need to refinance a significant $450 million loan. The Draft Red Herring Prospectus (DRHP) was withdrawn multiple times to address this debt and present a stronger financial position to potential investors.

2. What is OYO's current financial status?

OYO, officially Oravel Stays Ltd., has made a significant turnaround, reporting a profit in FY24 after years of substantial losses. This profitability, however, was driven by one-time gains from an acquisition and a liability reversal, rather than core operations. The company has also focused on aggressive cost-cutting to improve its financial health.

3. When is OYO expected to refile its IPO documents?

OYO is anticipated to refile its DRHP in 2025, or potentially by March 2026, after the planned refinancing of its $450 million loan is successfully completed.

4. What were OYO's original goals for the IPO?

OYO initially aimed to raise ₹8,430 crore (approximately $1.1 billion) through its IPO. The primary objectives were to repay a significant portion of its debt, fund organic and inorganic growth initiatives, and use the remaining funds for general corporate purposes.

5. What are the key strengths of OYO's business model?

OYO's business model is characterised by its asset-light approach, extensive global network of over 157,000 storefronts, and a full-stack technology platform. It also benefits from strong partner and customer retention and has demonstrated improved unit economics.

6. How is OYO planning to achieve sustainable profitability?

To achieve sustainable profitability, OYO is implementing strategic shifts. These include aggressive cost-cutting measures, consolidating its presence in core markets like India and Europe while exiting less profitable regions, and focusing on expanding its "company-serviced hotels."