JP Morgan extends Rs 200 cr credit line to boost Oyo accelerator programme

Oyo almost doubled its profit after tax to Rs 30 cr in Q3FY24, compared to the previous quarter's Rs 16 crore

JP Morgan has extended a Rs 200 crore credit facility to Oyo to fuel the hospitality major’s accelerator program, said sources familiar with the matter.

Launched in March 2023, Oyo’s accelerator programme was aimed at encouraging first-generation hoteliers to innovate and enter new markets, expand their customer base, and increase earnings by offering them financial support, mentorship, access to technology, and dedicated relationship managers.

The programme currently empowers over 700 hotels and more than 85 small and first-generation hoteliers from across the country, enabling them to expand their business and achieve long-term profitability, sources said.

Queries sent to the company did not elicit a response.

Through the accelerator, chosen hoteliers will also gain access to Oyo’s extensive network of over 15,000 corporate accounts and more than 10,000 travel agents across India to enhance their business prospects.

Oyo recently reported that it has doubled its profit after tax (PAT) sequentially in the third quarter (Q3) of financial year 2023-24 (FY24) to Rs 30 crore. The company marked its maiden profitable quarter with a PAT of over Rs 16 crore in Q2 FY24.

Founder Ritesh Agarwal had shared that the company clocked an adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) of Rs 750 crore or about $90 million in 2023, and expects to clock an adjusted Ebitda of Rs 1,000 crore or around $120 million in FY24, surpassing its earlier projected estimate of Rs 800 crore for FY24.

Meanwhile, Oyo’s revenue grew by 10 per cent Year-on-Year (Y-o-Y) in Q3 FY24. Agarwal also shared that Oyo saw a 27 per cent increase in the number of hotels on its platform to 17,000, over the past year. The company optimised its operating cost by 15 per cent in Q3 FY24 versus the year-ago period. The company last filed its Annual Accounts for FY23, and these updates are unaudited.

Credit rating agencies Moody’s and Fitch also reaffirmed their positive outlook on Oyo, citing its strong performance and sustained growth. Fitch said it may take positive rating action. Moody’s doubled its adjusted Ebitda estimate for FY24 from $50 million (projected in May 2023) to $90-$100 million.