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With the global economic outlook appearing dim, there have been concerns as to the projected IPO move from OYO.
Indian hotel and vacation homes startup, OYO is looking to revisit its Initial Public Offering (IPO) plans in about a year when it first filed the so-called Draft Red Herring Prospectus or DRHP, for a $1.1 billion IPO. Things have not particularly turned out as planned for OYO as it has seen a retrogressive growth in its earnings in the aftermath of the COVID-19 pandemic and the current global economic outlook.
In order to reposition its business and stand firm amid the dwindling earnings, OYO has had to lay off thousands of staff from its key markets. Besides the layoffs, OYO has instituted cost-cutting measures which include but are not limited to halting the help it renders the hotels within its ecosystem to renovate their buildings and removing the guaranteed rewards paid out.
The layoffs and cost-cutting measures have worked out fine for the firm as evident in its highly trimmed losses. According to its latest filing document, OYO said it lost 18.9 billion rupees ($237 million) for the first three months of the year through March. These losses, though big, come off as half of what it recorded from the same period in the past 12 months.
With OYO now setting its eyes on going public in 2023, the company’s IPO will be a very unique litmus test for the Indian economy whose market has proven fairly resilient when compared to the broader industry standard. Thus far this year, the Indian benchmark NSE Nifty 50 index is up 1%, very high performance when compared to the 27% Year-to-Date loss of the Nasdaq Composite (INDEXNASDAQ: .IXIC).
The war in Ukraine has particularly aggravated global market growth, and it remains a major determinant in the further performance of markets within Europe and Asia.
OYO IPO: The Right Timing?
With the global economic outlook appearing dim, there have been concerns as to the projected IPO move from OYO and whether it is the right time or not. While economic conditions are not guaranteed to be right by the time OYO looks to go public, the company’s performance at the time will determine how well investors will embrace its stocks.
The company was founded by Ritesh Agarwal back in 2013, has grown among the ranks, and currently has a market valuation of $9 billion according to the market research firm, CB Insights. Since its inception, the company has garnered high-profile investors including Japanese giant Softbank Group which owns about 47% of the company as against Agarwal’s one-third of the firm.
The quality of its investors may go a long way in bolstering investors’ confidence in backing the company. OYO is a success story in the Indian market as well as in the United States, China, Malaysia, Indonesia, and Europe where it has its operations. People are clamoring to be part of any innovative startup’s success story, and with the current goodwill surrounding OYO, its IPO is on track to be a success.