Hospitality giant Oyo is reportedly on the verge of securing between $100 million to $125 million in new funding. According to a report from TechCrunch on Monday, which cites unnamed sources, this new influx of capital is expected to set the company’s market valuation at $2.5 billion.
As of now, Oyo has not provided any official comment regarding the report.
In a recent announcement, the global budget-hotel chain revealed that it plans to refile its initial public offering (IPO) documents with the Securities and Exchange Board of India (SEBI). This comes after the company successfully refinanced its existing $450 million Term Loan B (TLB) at a lower interest rate. The refinancing is anticipated to generate annual savings of $8 to $10 million in the first year, with the figure expected to rise to $15 to $17 million annually in subsequent years.
The company recently celebrated a major financial milestone, marking its first profitable fiscal year in 2023-24. According to Ritesh Agarwal, Oyo’s Founder and CEO, the company reported a net profit of Rs 100 crore. “This was our eighth consecutive quarter of a positive EBITDA and we also have a cash balance of about Rs 1,000 crore,” Agarwal stated in a post on the social media platform X.
The improved financial performance has not gone unnoticed. Global credit rating firm Fitch has acknowledged the company’s achievements, noting its strong cash flow and upgrading its credit rating accordingly.
With the latest developments, Oyo is positioning itself strongly in the market, and Agarwal appears to be optimistic about the future. “FY25 will clearly be even more exciting,” he said, hinting at potential growth and new opportunities on the horizon.
Oyo’s strategic maneuvers, including the refinancing of its Term Loan B, aim to fortify its financial position. By reducing interest payments, the company stands to improve its liquidity and operational efficiency.
. Analysts speculate that these measures are likely to enhance investor confidence as the company charts its course toward the IPO.
The TechCrunch report has triggered considerable interest among market watchers and stakeholders, as it suggests that Oyo is securing capital at a time when global financial markets are experiencing volatility. Industry experts believe that the announced valuation of $2.5 billion, though a reduction from past highs, underscores the resilience of Oyo’s business model and its adaptability in an ever-changing market landscape.
The prospect of increased annual savings from the refinancing deal further adds a layer of financial stability, which could be attractive to potential investors. These savings are expected to be reinvested into the company’s operations, driving growth, expanding its footprint, and enhancing service offerings.
The new funding round, if successful, will provide Oyo with the necessary capital to fuel its expansion plans. The company has been actively working to enhance its technology stack and improve service quality, focusing on customer satisfaction and operational excellence. The additional funding will likely accelerate these efforts, allowing Oyo to remain competitive in the global hospitality sector.
The company’s journey towards profitability has been closely monitored by industry insiders and investors alike. The latest quarterly results and the announcement of its profitable fiscal year are seen as significant achievements, indicating a positive trajectory for the company.
While the road ahead may present challenges, Oyo’s strategic initiatives and financial prudence reflect its commitment to achieving long-term growth and stability. As the company prepares to refile its IPO papers, it remains focused on securing investor trust and capitalizing on emerging opportunities.
In summary, Oyo’s current moves, including the upcoming funding round and refinancing efforts, appear to be strategic steps aimed at strengthening its market position and setting the stage for future success. As it gears up for an exciting FY25, the hospitality major is poised to navigate the complexities of the global market with renewed vigor and confidence.
