Oyo IPO decoded: Issue size, smaller India business, financial report card, key risks

Oyo parent Prism Hotels and Resorts has publicly filed its updated draft red herring prospectus (UDRHP) with the Securities and Exchange Board of India (Sebi), formally kicking off the next stage of its Rs 6,650-crore initial public offering (IPO) after receiving the market regulator's approval earlier this month.

The proposed IPO comprises an entirely fresh issue of equity shares, with no offer for sale (OFS) by existing shareholders. The company also has the option to raise up to Rs 1,330 crore through a pre-IPO placement, which would proportionately reduce the size of the fresh issue if completed. Axis Capital, Citigroup Global Markets India, Goldman Sachs (India) Securities, ICICI Securities, InCred Capital, Intensive Fiscal Services, JM Financial and SBI Capital Markets are the book-running lead managers to the issue.

The filing offers investors a detailed look at how Oyo has changed since its aborted 2021 listing attempt. Here's what stands out.

A fresh issue, not an investor exit

One of the biggest takeaways from the filing is that the IPO is entirely a primary issue. Unlike several recent startup listings, none of Oyo's existing shareholders—including SoftBank, Microsoft, Airbnb, Peak XV Partners, Lightspeed or founder Ritesh Agarwal—are selling shares through the offering.

Instead, the company is using the public issue primarily to strengthen its balance sheet.

Of the Rs 6,650 crore it plans to raise, Rs 4,987.5 crore, or 75 percent of the issue proceeds, has been earmarked for repayment or prepayment of borrowings through its Singapore subsidiary. The balance will be used for general corporate purposes, including acquisitions, working capital, capital expenditure, marketing and brand-building initiatives.

As first reported by Moneycontrol, Prism had confidentially filed its draft papers in December last year and was targeting a valuation of around $7-8 billion, significantly lower than the roughly $12 billion valuation it had sought during its first IPO attempt in 2021.

India is no longer the centre of the business

The filing also highlights how dramatically Oyo's geographic mix has changed over the past few years.

For the nine months ended December 2025, 83.8 percent of the company's revenue came from outside India, while India's share fell to 16.2 percent, down from 25.3 percent in FY23.

The US has emerged as Oyo's largest market, contributing 27.1 percent of revenue, followed by Europe at 23.6 percent, with India ranking third.

The shift has largely been driven by acquisitions. Oyo's purchase of G6 Hospitality, which owns the Motel 6 and Studio 6 brands, has made North America its biggest market, while its earlier acquisition of Leisure Group significantly expanded its vacation homes business across Europe.

The company itself identifies this growing dependence on overseas markets as a risk, noting that adverse developments in these geographies could materially affect its business, financial condition and cash flows.

A stronger financial report card

The numbers suggest Oyo is heading to the public markets in considerably better financial shape than it was four years ago.

For the first nine months of FY26, the company reported revenue from operations of Rs 6,941 crore and a profit after tax of Rs 748 crore. EBITDA more than doubled to Rs 2,127 crore from Rs 953 crore a year earlier, reflecting a sharp improvement in operating performance.

The balance sheet, however, still carries significant leverage. Total borrowings stood at Rs 7,485 crore as of December 31, 2025, exceeding the company's net worth of Rs 6,147 crore. That also explains why debt repayment accounts for the bulk of the IPO proceeds.

The company has further cautioned that because the issue size exceeds its net worth, the infusion of fresh capital could temporarily affect financial ratios such as return on equity and earnings per share until the proceeds are fully deployed.

The filing also sheds light on founder and chief executive Ritesh Agarwal's remuneration across Oyo's global operations.

Apart from his compensation in India, Agarwal also receives remuneration from the company's Singapore, Dubai and UK subsidiaries under separate employment agreements.

Ahead of the IPO, Prism also strengthened its board by appointing former Sebi chairman Ajay Tyagi as an independent director.

While the financials have improved, the filing also highlights several risks.

The most prominent is Oyo's increasing dependence on international markets, with nearly 84 percent of revenue now generated outside India.

The company has also reiterated the long-running legal dispute with Zostel, stating that an adverse outcome could require it to issue or transfer up to 7 percent of its share capital, or pay an equivalent monetary amount.

Prism further disclosed that proceedings relating to an order passed by the Competition Commission of India (CCI) remain pending. It warned that any adverse ruling or additional penalties could impact its business and reputation.

The filing also lists several tax, regulatory and civil proceedings involving the company, its subsidiaries, promoters and directors, although many relate to the ordinary course of business.

Taken together, the IPO papers show a company that looks markedly different from the Oyo that first sought to list in 2021. It is now more profitable, derives the bulk of its business from overseas markets and is using the IPO primarily to clean up its balance sheet. At the same time, investors will have to weigh those gains against the company's leverage, global exposure and unresolved legal disputes as it prepares for its market debut.

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