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Oyo Secures $50 Million Funding After Nearly Three Years, Company Valuation Sees Shift

OYO
Preeti Bali / 6:54 am / July 4, 2024

Oyo, the Gurugram-based hospitality giant, has secured fresh funding of Rs 416.85 crore (approximately $50 million) from InCred Wealth and Investment. This marks the company’s first significant investment in nearly three years.

Funds Allocated for Growth and Expansion

The funding infusion comes courtesy of a special resolution passed by Oyo’s board. The resolution authorized the issuance of 14,37,41,379 Series G CCPS at an issue price of Rs 29 each, raising the targeted capital. Oyo plans to utilize these funds to fuel growth initiatives, expand its global presence potentially through acquisitions, and bolster its existing business strategies.

Valuation Takes a Hit

According to estimates by TheKredible, the company’s post-allotment valuation stands at approximately Rs 19,756 crore ($2.38 billion). This means a critical decline contrasted with Oyo’s pinnacle valuation. InCred Riches and Venture’s speculation means a 2.11% stake in the organization after designation.

Shifting Tides: From Highs to Lower Valuation

It’s worth noting that Oyo previously enjoyed a much higher valuation. In August 2021, US tech giant Microsoft invested $5 million in the company at a valuation of $9.6 billion. The current funding round reflects a valuation haircut exceeding 70% from that peak.

Profitability and Revenue Growth Signals

Despite the valuation shift, Oyo has shown promising signs on the financial front. Recently, the company’s founder, Ritesh Aggarwal, announced their first annual net profit of Rs 100 crore for FY24. While revenue figures for the last fiscal year remain undisclosed, FY23 witnessed a 14.3% year-on-year growth in operational revenue, reaching Rs 5,464 crore from Rs 4,871 crore in FY22. Additionally, the company managed to reduce losses by 33.7% during this period, bringing the figure down to Rs 1,287 crore.

IPO Plans on Hold, Potential Refiling on the Horizon

Oyo recently made the decision to withdraw its draft IPO papers (DRHP) for the second time, citing unfavorable market conditions. However, the company has hinted at refiling the IPO documents once the current funding round concludes, potentially indicating plans to raise additional capital.

SoftBank’s Downgrade Rejected

It’s vital to recognize that Oyo’s significant financial backer, SoftBank, recently endeavored to minimize the organization’s valuation to $3.4 billion out of 2022. Notwithstanding, Oyo dismissed this markdown at that point.

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