In a first, Softbank-backed OYO turns cash flow-positive in Q4FY23

Softbank-backed hospitality major OYO said it turned cash flow-positive in the fourth quarter of FY23, marking its first profitable quarter, the company told its employees in a presentation.

The company is anticipated to end the quarter with nearly Rs 90 crore in surplus cash flow, according to the presentation, which was seen by Business Standard.

Sources close to the company said the positive cash trajectory is expected to continue into the first quarter of FY24.

Its founder and CEO Ritesh Agarwal had told employees last month that OYO’s revenue for FY23 was expected to be over Rs 5,700 crore, up 19 per cent from Rs 4,780 crore in the previous financial year.

The firm expects to report adjusted Ebitda (earnings before interest, taxes, depreciation, and amortisation) of about Rs 800 crore in FY24.

A source said this can be attributed to increase in bookings across key geographies like India, Indonesia, the US and the UK, but especially in the Europe homes business, which is witnessing unprecedented advance bookings for both for the upcoming summer season and even the relatively off-season period from November to March. 

“The company is taking measures to keep healthy cash runaway and is continuing to operate in a cost-effective way. We have a current cash balance of Rs 2,700 crore and we hope we will end up consuming very little of it for existing operations,” a source said, quoting Agarwal.

For the second half of the year, Agarwal shared that OYO’s adjusted Ebitda is expected to rise three-fold to Rs 185 crore, marking the company’s first financial year of adjusted Ebitda profitability.

Revenue for the period, the CEO revealed, is expected to be over Rs 2,800 crore, a year-on-year increase of 15 per cent compared to the same period in FY2022.

Oravel Stays, the parent firm of OYO, recently refiled its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) under the confidential pre-filing route.

The issue size for the company’s public listing was reduced by almost half to $400-600 billion, all of which will be raised through a primary issuance, in a bid to repay most of the firm’s debt, Business Standard had reported earlier. The company expects an issue timing of November this year, following approvals from Sebi.