OYO raises Rs 417 crore from InCred at 76.1% valuation cut, reports say

Shark Tank India judge Ritesh Agarwal-led hospitality unicorn OYO has reportedly raised around Rs 416.85 crore (or nearly $50 million) from InCred Wealth and Investment.

While there is no official announcement from the company, Entrackr's report said the investment valued OYO at Rs 19,756 crore (around $2.38 billion), marking a significant 76% decrease from its peak valuation of $10 billion. 

Details of the funding round

The latest investment by InCred Wealth and Investment marks the first significant funding for OYO in nearly three years.

The company's board passed a special resolution to issue 14,37,41,379 Series G CCPS at an issue price of Rs 29 each, raising Rs 416.85 crore ($50 million).

The latest investment gives InCred a 2.11% stake in OYO post-allotment, Entrackr reported, citing the company's regulatory filings accessed from the Ministry of Corporate Affairs and the Registrar of Companies (RoC).

Focused on global expansion and profitability

The Gurugram-based traveltech giant is expected to use the funds for growth, global expansion, including acquisitions, and enhancing its business plans.

Last month, OYO announced the launch of its first luxury hotel, the Palette Royal Reflections Hotel and Spa, in Dubai.

In FY24, OYO reported an adjusted EBITDA of Rs 888 crore ($107 million), a substantial increase from Rs 274 crore ($33 million) in FY23.

Additionally, the company added about 5,000 hotels and 6,000 homes globally, and its gross margins improved, reaching Rs 2,508 crore ($302 million), up from Rs 2,350 crore ($283 million) in FY23. Operating costs also decreased from 19% of GBV in FY23 to 14% of GBV in FY24.

Microsoft's investment in OYO

In August 2021, Satya Nadella-led tech giant Microsoft invested $5 million in OYO at a valuation of somewhere around $9.6 billion. However, the following year, the company's major investor, SoftBank, reportedly reduced its valuation to $2.7 billion.

Is OYO profitable?

OYO's Founder, Ritesh Agarwal, recently announced that the company posted its maiden annual net profit of Rs 100 crore in FY24 and has marked its eighth consecutive EBITDA-positive quarter.

Despite these positive developments, OYO has withdrawn its IPO application twice due to unfavourable market conditions but plans to refile its draft prospectus reportedly after the completion of the refinancing of the $450 million loan, which is expected by the next quarter. 

Last month, ET reported that OYO is in the advanced stages of raising approximately Rs 1,000 crore (or about $120 million) in funding from the family offices of prominent Indian corporate executives and stock market experts.