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The Securities and Exchange Board of India (SEBI) has asked Oravel Stays, the parent company of hospitality chain Oyo Hotels to refile its draft red herring prospectus (DRHP) with revisions. According to the SEBI website, the offer document was returned on 30th December 2022 with advice to re-file with applicable updates and revisions. The company was hoping to launch its IPO around April-July 2023 but given the new developments, they are now likely to hit the market only around Diwali, subject to market sentiments.
The market watchdog has asked the company to submit updated key performance indicators (KPIs), parameters for offering pricings, risk factors and other such details. Since its initial filing in September 2021, the company has subsequently filled several amendments to document improved cash-burn, reduction in litigations and a healthier EBITA (earnings before interest, tax, depreciation, and amortisation). As per the official statement released on the SEBI website, Oyo Hotels has filled two addendums sharing additional information in September and November 2022 respectively.
The company has reported a revenue of Rs 4,900 crores for the financial year 2021-22, indicating an 18 percent YoY growth from the previous year. It is also claims to have reduced its losses by almost half in FY 21-22.
According to its initial filling in 2021, the company was intending to raise Rs 8,430 crores through a fresh issue of equity shares worth Rs 7,000 crores and an offer for sale (OFS) of up to Rs 1,430 crores. Given the recent developments, the insiders believe the issue size is likely to come down subject to fresh valuations and their cash requirements. Experts believe it is unusual for SEBI to have returned the DRHP with advice to re-file with updates. However, the DRHP has neither been withdrawn by the company nor rejected by SEBI. As long as the DRHP is alive, the company cannot raise fresh funds without disclosing the same to the concerned authorities.
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