Valuation Report on OYO Puts an End to the IPO Noise?

As per the report filed with MCA, the hospitality unicorn will only turn profitable in 2022
Valuation Report on OYO Puts an End to the IPO Noise?
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Troubles for hospitality Unicorn OYO continues to increase. At a time when the company is dealing with issues related to hotel owners, the company’s valuation report revealed that its losses has increased six folds to reach INR 2,384.69 crore in FY19 from INR 360.42 crore in FY18. These results indicate that the company might need to forget its listing plans for now.

According to the MCA filing, reviewed by Entrepreneur India, OYO’s revenue from operation increased to INR 6,456.9 crore in FY19 from INR 1,413 crore in FY18. The report also showed the total expenditure increased to INR 9,027.53 crore in FY19 from INR 1,835.38 crore last year.

The valuation report also pegged the company’s post-money valuation at $5.32 billion as of June. While the valuation of its India business has been pegged at $1.18 billion, China’s business is valued at $991 million, Japan’s business at $256.7 million and the rest of the world including Singapore, Malaysia, the US, among others, at $1.21 billion.

IPO Speculations

In July 2019, it was speculated that OYO was looking for an IPO in the next two-three years. However, later in an interview with CNBC, founder and CEO Ritesh Agarwal dismissed the speculations and said the company doesn't have plans for IPO as it is focusing on business expansion. 

Becoming profitable is important for OYO in case it plans to list, however the question remains, will it be possible for it to be profitable by 2022-23? According to the report, Oyo’s India business will make losses till 2021. Post that, the SoftBank-backed hospitality company may report net profit after tax of $45.2 million in 2022.

Financials Not Finally Audited: OYO

In response to the valuation report, OYO said the financials are not yet audited and the report is based on inputs from OYO’s valuers.

“The numbers referred to in the story are not yet audited financials. The numbers are based on a valuation report prepared by OYO's valuers (not auditors) that includes certain provisional financials for FY 19. It may be pointed out that the valuation parameters such as share prices are based on fair market value and are not reflective of the share premium price. We would like to clarify again that these are not the final audited financials and the same will be issued later by the company along with the annual report that we issue every year and file with the RoC as well,” said an OYO spokesperson.

These results come in after the company announced in October that it is in the process of raising $1.5 billion, as part of its Series F funding round. According to the official statement, Agarwal’s RA Hospitality Holdings will infuse approximately $700 million as primary capital in the company. The balance $800 million will be raised from the existing investors. 

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