Japanese investor SoftBank Group has reduced the valuation of OYO Hotels on its books by over 20 per cent as the Indian startup prepares for an initial public offering (IPO). The investor has cut its valuation from $3.4 billion to $2.7 billion in the June 2022 quarter, according to a Bloomberg report.
SoftBank cut the valuation after benchmarking it against peers with similar operations, the report said. It added that the startup was aiming a valuation of $9 billion in its IPO after preliminary talks with potential investors.
The company had filed preliminary papers with Sebi to raise Rs 8,430 crore through an initial share sale in October last year. When the company filed its DRHP with Sebi in October 2021, the markets were buoyant and IPOs were getting high valuations and oversubscription with both global and domestic capital flowing into the stock market. However, the scenario has also changed since then, with the ongoing geopolitical unrest, rising inflation and interest rate hike cycle.
OYO has now filed fresh financial documents with market regulator Sebi and aims its public listing later this year or early 2023. According to the fresh DRHP, for the full financial year 2021-22, OYO’s total loss stood at Rs 2,139.9 crore, compared with Rs 4,103.3 crore in 2020-21. Its adjusted Ebitda loss came at Rs 471.7 crore in 2021-22, against a loss of Rs 1,744.7 crore in FY21.
In the first quarter of the current financial year, it reported a loss of Rs 413.9 crore. However, it said it has turned operationally profitable for the first time in the same quarter, before accounting for costs related to its employee stock option grants. Its adjusted Ebitda (earnings before interest, taxation, depreciation and amortization) stood at Rs 7.26 crore before ‘share-based expenses’.
It also said its general and administrative expenses declined 44.4 per cent to Rs 515 crore in FY22, compared with Rs 926 crore in FY21. OYO’s revenue from contracts with customers in FY22 jumped 20.7 per cent year-on-year to Rs 4,781.3 crore. Its revenue from contracts with customers in the June 2022 quarter stood at Rs 1,459.3 crore.
In August 2021, when OYO raised $5 million from Microsoft, it was valued at $9.6 billion.