The IPO was expected to be launched in the first half of 2023.
The Securities and Exchange Board of India (Sebi) has asked Oravel Stays (Oyo) to update risk factors, its key performance indicators (KPIs), outstanding litigations and the basis for valuation in the company’s draft red herring prospectus (DRHP), the people said.
This could delay the proposed IPO by a quarter, as updating the DRHP will take more time, sources said.
The opportunity to update all material information is, however, a ‘welcome’ step, a source with knowledge of the company’s plans added. “It would only be prudent to expect investors to put in money on the basis of the latest information, and we have been asked to provide the latest disclosures at the appropriate pre-IPO stage. This is the most sensible course of action now,” the person said. “It may also shift the IPO plans by two-three months, but we will be able to show a full financial year of Ebitda profits in the process.”
Ebitda stands for earnings before interest, taxes, depreciation and amortisation and is a measure of a company’s profitability.
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Oyo recently submitted financial numbers for the first half of FY23 to Sebi through an addendum to the DRHP. It told the regulator that potential investors needed to be made aware of the material uptick in business performance since its IPO application in September 2021.
Oyo reported its maiden positive-adjusted Ebitda of Rs 63 crore, a 24% year-on-year increase in revenue and a 69% increase in monthly gross booking value (GBV) for its hotels in the first six months of financial year 2023.
Sebi has now asked the company to update other material information.
In a letter to Oyo, Sebi said disclosures contained in the present DRHP do not consider the material changes and disclosures arising from updated financial statements filed through addendums, leading to revised period for disclosures, which, in turn, requires material updates in risk factors, basis of offer price, outstanding litigations and updates to other relevant sections of the DRHP, a source familiar with the matter told ET.
Oyo reported an adjusted Ebitda of Rs 56 crore for July-September, up from Rs 7 crore in the preceding three-month period, driven by a 23% quarter-on-quarter rise in monthly revenue per property, or GBV per hotel, to Rs 4 lakh.
The company reported a loss of Rs 333 crore in the September quarter, narrowing from a loss of Rs 414 crore in the June quarter, the addendum to its DRHP showed. It reported a revenue of Rs 1,446 crore in the second quarter.
