SUMMARY
- Oyo has recorded a profit of Rs 229 crore in FY24, a marked improvement from the losses of Rs 1,286 crore in the year before.
- Its earnings from its core operations dropped by 1.4% to Rs 5,389 crore in FY24 from Rs 5,464 crore in FY23.
- The company’s spending on advertising, commissions, brokerage, legal, IT, and other expenses amounted to Rs 4,500 crore in the fiscal year under review, about 13% lower than Rs 5,207 crore in FY23.
The traveltech giant Oyo has reported its first profitable financial year for the 2023-24 fiscal year (FY24) due to a surge in demand and a better outlook in the market.
Oyo has recorded a profit of Rs 229 crore in FY24, a marked improvement from the losses of Rs 1,286 crore in the year before. Its earnings from its core operations dropped by 1.4% to Rs 5,389 crore in FY24 from Rs 5,464 crore in FY23, as detailed in its consolidated annual report.
The company pointed out that the decrease in its revenue was due to the addition of new hotels to its inventory during the fiscal year. By the end of FY24, OYO had 18,103 hotels compared to 12,938 at the end of the previous fiscal year. The company mentioned that these new hotels would require time to reach their full revenue potential.
The majority of Oyo’s income, 63.8%, came from the revenue from accommodation services, which saw a decrease of 7.3% to Rs 3,441 crore in FY24. The company also earned Rs 1,344 crore from commissions and bookings. Other sources of income for Oyo included the sale of tour packages, events, cancellation fees, and insurance services.
Additionally, the traveltech generated Rs 153 crore from interest on fixed deposits and gains from foreign exchange differences, taking its total revenue to Rs 5,542 crore from Rs 5,602 crore in the previous year.
The cost of its lease rental and service lease, which accounted for 50% of its total expenses, saw a decrease of 8% to Rs 2,885 crore in the current fiscal year. This reduction was due to lower payments to hotel owners for services like housekeeping, electricity, and maintenance.
The Gurugram-based company’s expenditure on salaries and other employee benefits fell by 52% to Rs 744 crore in FY24, mainly because of lower costs related to employee stock options, which decreased to Rs 107 crore from Rs 363 crore in the previous fiscal.
Oyo also paid Rs 844 crore in interest for the current fiscal year. It managed to secure a $660 million term loan from various lenders in the previous year. The company’s spending on advertising, commissions, brokerage, legal, IT, and other expenses amounted to Rs 4,500 crore in the fiscal year under review, about 13% lower than Rs 5,207 crore in FY23.
Additionally, the company’s EBITDA rose to Rs 887.81 crore, a notable improvement from the previous fiscal’s figure of Rs 256.5 crore.
Oyo’s return on equity (ROCE) increased to 13.4%, and its earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to 15.5%. On a per-unit basis, the company spent Rs 1.06 to earn a rupee in the current fiscal year.
In a press release, the company credited its financial turnaround to its increased emphasis on enhancing the quality of its hotel locations. It highlighted this focus through its offerings such as Super OYO, a selection of its top-tier hotels, and the introduction of its premium hotel brand Palette.
The company stated, “Over the last year, we have seen a surge in demand in the mid-premium and premium segments, and moving forward, we strive to offer greater choices across varied price points to guests who have rising aspirations.”
To meet this demand, the company is set to launch 25 new “high-quality, upscale properties” under the ‘SUNDAY’ brand in FY25. These hotels are scheduled to be established in Gurugram, Manesar, and Corbett.
The company’s yearly report revealed that it has experienced growth in Europe, the US, Southeast Asia, and the Middle East though the focus was on business in India. In line with its strategy to expand globally, the company is planning to purchase a Paris-based high-end rental homes business Checkmyguest group through issuing 7.92 billion Series G CCPS.
Before its financial reports for the latest fiscal year were released, the company’s total value dropped from the previous $10 billion to $2.37 billion. On August 12, it secured $175 million in its latest funding round, led by Agarwal’s Singapore-based company Patient Capital, including J&A Partners and ASK Financial Holdings as well.
The company has previously attempted to go public twice. Currently, it is preparing to resubmit its initial public offering draft prospectus shortly before shifting its focus to OYO’s plans to refinance its debt before going public.
Sources suggest that the IPO could be delayed by six to twelve months as the company awaits the terms of the refinancing agreement for the $660 million Term Loan B it received from founder and CEO Ritesh Agarwal in 2019 to repurchase shares from investors.
In its financial disclosures, the company stated that it reduced its interest expenses by $195 million through the repurchase of 30% of OYO’s outstanding Term Loan B (TLB) due in June 2026. The company aims to refinance its existing debt at a lower interest rate over the SOFR, aiming to lower the effective interest rate from 14% to 10%, which would result in annual savings of approximately $15-$17 million and extend the repayment period to 2029.
