Oyo is preparing to file its draft red herring prospectus (DRHP) in November, aiming for an IPO valuation of US$7 billion to US$8 billion.

The IPO proposal is expected to be presented to its board next week.

SoftBank, one of Oyo’s largest shareholders, has held discussions with banks including Axis, Citi, Goldman Sachs, ICICI, JM Financial, and Jefferies to gauge market sentiment.

The filing is expected to highlight OYO’s latest Q1 financial results.

Oyo is also considering a new parent brand identity and may launch a separate app for its premium and mid-market hotels.

The company has not confirmed a specific timeline for the DRHP or IPO.

🔗 Source: The Economic Times

🧠 Food for thought

1️⃣ Valuation compression reflects market reality check for growth-stage companies

OYO’s current IPO target of $7-8 billion represents a notable decline from its peak private valuation of $10 billion achieved in 2019 2.

This downward adjustment comes despite the company apparently reaching EBITDA profitability, with the current valuation pegged at 25-30 times EBITDA 1.

Back in 2019, OYO was reporting ongoing operational losses and struggling with profitability at the company level, even as it showed a 50% year-over-year improvement in EBITDA 2.

The valuation compression highlights how public market standards differ significantly from private funding rounds, where venture capital interest previously drove valuations despite operational losses 3.

This reflects broader market conditions where growth-stage companies face more stringent profitability requirements for public offerings compared to the venture capital environment of 2019.

2️⃣ SoftBank’s continued involvement signals commitment despite portfolio challenges

SoftBank remains OYO’s largest shareholder and has actively engaged with major banks including Axis, Citi, Goldman Sachs, ICICI, JM Financial, and Jefferies to assess market sentiment for the IPO 1.

Recent OYO developments