Oyo IPO

About Oyo IPO

The Oyo IPO comprises a fresh issue and an offer for sale. The fresh issue aggregates up to ₹7000 crores and the offer for sale is up to ₹1430 crores. The total issue size is pegged at ₹8430 crores. It’s a book-built issue. The price band is TBA. The IPO opens on TBA and closes on TBA.

The listing date is on TBA and the allotment date is TBA. The credit of shares to the Demat account will take place on TBA, while the initiation of refund will take place on TBA.

Oyo is a leading, new-age technology platform empowering the large yet highly fragmented global hospitality ecosystem, according to RedSeer. It has been focused on reshaping the short-stay accommodation space since its incorporation in 2012.

Objectives of Oyo IPO

The company proposes to utilise the IPO proceeds for:

• Prepayment or repayment, in part, of certain borrowings availed by certain of its subsidiaries
  
• Funding organic and inorganic growth initiatives
  
• General corporate purposes
  

Industry Outlook

Within the travel and tourism industry, the short-stay accommodation market is one of the fastest growing segments. The short-stay accommodation segment refers to stays of up to one month, and the market comprises stays across hotels, homes, guesthouses, bed & breakfasts and campsites for tourists and travelers.

From 2015 to 2019, the total short-stay accommodation market grew at 7.5% CAGR to reach around US$ 1.3 trillion in 2019. While the industry dipped in 2020 due to COVID-19 restrictions, it is projected to revive back and reach US$1.1 trillion in 2021. Going forward, the industry is projected to grow at 6.6% CAGR from 2021 to 2030 to reach US$1.9 trillion in 2030. Also, it is projected that India will be one of the fastest growing short-stay accommodation markets globally, growing at ~13% annually between 2021 and 2025.

Oyo Company Information

Oyo is a leading, new-age technology platform empowering the large yet highly fragmented global hospitality ecosystem, according to RedSeer. It has been focused on reshaping the short-stay accommodation space since its incorporation in 2012 and has developed a unique two-sided technology platform focused on comprehensively addressing key pain points of its patrons (being the owners, lessors and/or operators of storefronts listed on its platform) on the supply side and its customers (being travellers and guests who book accommodations at its patrons’ storefronts through its platform) on the demand side.

Strengths of Oyo IPO

• Scaled footprint with leadership in core growth markets
  
• Full-stack technology platform driving strong value proposition for its patrons and customers
  
• High degree of engagement with its patron and customer community
  
• Virtuous flywheel driven by strong network effects
  
• Inherent financial strength with strong unit economics
  
• Strong and trusted consumer brand
  
• Strong leadership team with deep experience
  

Risks of Oyo IPO

• History of net losses in each year since incorporation and ability to achieve profitability may be delayed
  
• May face difficulties in executing its expansion plans and implementing its growth strategies
  
• Failure to retain existing patrons and customers or acquire new patrons and customers in a cost-effective manner may decrease revenues
  
• Negative publicity could damage brand and thereby harm ability to compete effectively
  
• Failure to innovate and develop platform may result in suffering of business and results of operations
  
• Reliance on third-party distributors, travel management companies and global distribution systems to market and distribute storefronts, may adversely affect margins and profitability
  
• Adverse outcome in legal proceedings involving Zostel may materially and adversely affect business
  
• Business and activities may be regulated by competition laws of various jurisdictions
  
• Decline in the travel and accommodation industries or economic downturn could materially and adversely affect business
  
• Pricing methodologies and the revenue share may be impacted by a number of factors and it may not always be successful in attracting and retaining patrons and customers
  

Peer Comparison

There are no listed companies in India that engage in a business similar to that of Oyo. Hence, it is not possible to provide an industry comparison in relation to it.

Anchor Investor Bidding Date

TBA

IPO Registrar and Book Running Lead Managers

• IPO Registrar: Link Intime India
• Book Running Lead Managers: ICICI Securities, Nomura Financial Advisory, JM Financial and Deutsche Equities India

Business Model

Oyo’s business model relies on its patrons who list their storefronts on its platform and its large base of customers who book accommodations at its patrons’ storefronts through the platform.

The company distributes its patrons’ hotel and home storefront inventory through the D2C channels on its platform and through indirect channels with third party OTAs and generally earn an average revenue share of 20% to 35% of GBV (net of discounts and loyalty points), which creates strong alignment between the company and its patrons.

It also offers a listing only service, where patrons can list their storefronts on its platform for a fixed subscription fee.

Oyo Company Growth Trajectory

During fiscal 2020 and fiscal 2021, Oyo implemented several initiatives that strengthened its unit economics profile, while improving its value proposition for patrons and customers. As a result, its unit economics, measured based on contribution profit, improved from 5.1% in fiscal 2020 to 18.4% in fiscal 2021. Its adjusted EBITDA margin improved from (62.9) % in fiscal 2020 to (44) % in fiscal 2021. The number of storefronts increased from 21,616 in fiscal 2019 to 157,344 in fiscal 2021.

Market Position

As of March 31, 2021, Oyo had 157,344 storefronts across more than 35 countries listed on its platform. As of September 9, 2021, it had the largest footprint in terms of hotel storefronts in India and SEA (which includes Indonesia, Malaysia, Singapore, Thailand, Philippines and Vietnam) and the second largest footprint in Europe in terms of home storefronts among full stack short-stay accommodation players, according to RedSeer.

The company was also identified as the most valuable travel and hospitality brand in India and 30th most valuable brand overall in India by a study conducted by Kantar for 2020.

How to Check Allotment Status of Oyo IPO?

1. Visit the Registrar’s Website

• Visit the website of Link Intime India
  
• Choose ‘Public Issues’ from Investor Services dropdown
  
• Choose the name of the company from ‘Select Company’ dropdown
  
• Enter any of these - PAN Number, Application Number, DP/Client ID, Account Number / IFSC
  
• Click on Submit to check the status
  

2. Check on the National Stock Exchange Website

The National Stock Exchange (NSE) website has an IPO bid verification module. You can use it to check the allotment status of Oyo IPO. Go to the NSE website and find the 'Invest' tab. Click on 'Verify IPO Bids' under 'Resources & Tools'.

On the NSE IPO bid verification page, enter:

• Company name from dropdown
  
• Application number
  
• PAN
  

Then click 'Submit' to know the allotment status.

3. Check on the BSE Website

The Bombay Stock Exchange (BSE) also has an IPO allotment status page. Go to the BSE website and find the 'Investors' tab. Under 'Investors', click on 'IPO'. This will take you to the IPO allotment status page. On the BSE IPO page, follow these steps:

• Select 'Equity' from the dropdown menu
• Choose 'Oyo' in the next dropdown
• Enter your application number
• Enter your PAN
• Click 'Search’ to know allotment status

How to Apply for the Oyo IPO?

To apply for this IPO:

• Log in to your Kotak Securities Demat account: Log in to your Demat account to access IPO investments. Next, select the current IPO section.
  
• Specify IPO details: Enter the number of lots and the price you wish to apply for.
  
• Enter UPI ID: After entering your UPI ID, click submit. This will place your bid with the exchange.
  
• Mandate Notification: Your UPI app will receive a mandate notification to block funds.
  
• Approve Request: Your funds will be blocked once you approve the mandate request on your UPI.