Oyo turns cash flow positive in Q4, ends FY23 in black as it gears up to go public

The Ritesh Agarwal-led company ended Q4FY23 with Rs 90 crore in cash flow surplus.

Hospitality and travel tech startup Oyo said it has turned cash flow positive in the fourth quarter of the financial year (FY) 2023, in a presentation to employees.

The Ritesh Agarwal-led company ended Q4FY23 with Rs 90 crore in cash flow surplus, as per one of the slides in the presentation, a copy of which Moneycontrol has seen.

With this, the IPO-bound company was now on track to end FY23 with adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) of around Rs 245 crore in FY23, making it Oyo’s first profitable year since its inception around 2013.

That rise in adjusted EBITDA was because the company likely tripled its adjusted EBITDA in H2FY23 to around Rs 185 crore, a jump from when Oyo reported a negative adjusted EBITDA of Rs 190 crore in H2FY22, and because of an improvement in operational efficiencies that helped Oyo register an adjusted EBITDA of Rs 63 crore in H1FY23, according to an addendum that the company filed with capital markets regulator, the securities and exchange board of India (SEBI).

Oyo also witnessed an increase on the revenue front. It likely exited the previous financial year with a 19 percent increase, from Rs 4,780 crore in FY22 to Rs 5,708 crore in FY23. Oyo was hopeful of maintaining that pace of growth. Its adjusted EBITDA is likely to increase from Rs 245 crore in FY23 to about Rs 800 crore in FY24, the presentation estimated.

A rise in bookings across all key geographies, and especially in the Europe homes business – which is witnessing unprecedented advance bookings – was likely the reason, according to people in the know.

The company -- which refiled its draft red herring prospectus (DRHP) with the SEBI under the recently introduced pre-filing route and is looking to raise over Rs 8,400 crore through a mix of primary and secondary shares –– was sitting on a cash reserve of around Rs 2,700 crore, according to the presentation.

Oyo’s IPO would include a fresh issue of equity shares up to Rs 7,000 crore and an offer for sale (OFS) of Rs 1,430 crore. Oyo was looking to hit the public markets at a valuation much lower than $10 billion that it was initially eyeing, according to reports. A Oyo spokesperson did not comment in response to Moneycontrol's queries.