- 1. This IPO Is Meant to Strengthen the Business, Not Give Existing Investors an Exit
- 2. The Business Looks Very Different From OYO's Earlier IPO Plan
- 3. This Is No Longer Just an Indian Hospitality Business
- 4. The Filing Also Highlights Risks Investors Should Keep an Eye On
- 5. The Most Important Questions Are Still Ahead
- Our Take
Oravel Stays Limited, the parent company of OYO, has filed its Updated Draft Red Herring Prospectus (UDRHP) with SEBI, moving one step closer to its proposed IPO. The company plans to raise ₹6,650 crore through a fresh issue of shares and is reportedly targeting a valuation of around $7 billion to $8 billion.
The company had confidentially filed its IPO papers in December 2025, as per reports. After receiving SEBI's approval earlier this month, it has now filed the updated DRHP. While most headlines have focused on the IPO size and valuation, the updated filing reveals much more about the company's financials, strategy, and future plans. Here are five key insights retail investors should know.
1. This IPO Is Meant to Strengthen the Business, Not Give Existing Investors an Exit
One of the biggest highlights of the IPO is its structure. The entire ₹6,650 crore issue is a fresh issue of shares, with no Offer for Sale (OFS).
In many IPOs, existing investors sell part of their stake through an OFS, meaning the money goes to those shareholders instead of the company. That's not the case here.
Shareholders such as SoftBank, founder Ritesh Agarwal, Airbnb, Microsoft, Lightspeed, and Peak XV Partners are not selling any shares. Every rupee raised will go to Oravel Stays Limited, the company behind OYO.
The company has also clearly disclosed how it plans to use the funds. Around ₹4,987.5 crore, nearly 75% of the IPO proceeds, will be used to repay borrowings of its subsidiaries.
Think of it like using a bonus to repay a home loan instead of making a new purchase. Lower debt means lower interest costs, which can strengthen the company's financial position and improve future cash flows, provided the underlying business continues to perform well.
2. The Business Looks Very Different From OYO's Earlier IPO Plan
When OYO first planned to go public, much of the discussion centred on one question: Can the company ever become sustainably profitable?
The latest filing suggests that this conversation has evolved.
Unlike earlier discussions that often relied on adjusted performance metrics, the UDRHP presents audited financial statements, giving investors a much clearer picture of the business.
The numbers show noticeable improvement. During the first nine months of FY26 (ended December 2025):
- Revenue reached ₹6,941 crore, already higher than the ₹6,253 crore reported in the entire FY25.
- EBITDA increased to ₹2,127 crore, up from ₹953 crore in FY25.
- Net profit rose to ₹748 crore, compared with ₹245 crore in FY25.
At first glance, these numbers look encouraging. But investors should avoid judging the business based only on the headline net profit.
That's because reported profits can also be influenced by accounting adjustments and one-time events, not just the company's day-to-day operations. In Oravel Stays' case, a significant part of the reported profit came from deferred tax credits, which increase accounting profit without bringing in additional operating income.
If we exclude these one-time items and tax-related adjustments, Oravel Stays moved from an underlying loss of ₹322.3 crore in FY25 to an underlying profit of ₹245.2 crore in the first nine months of FY26.
This presents a more balanced picture. The business is clearly improving, but the ₹748 crore headline net profit paints a stronger turnaround than the underlying operations alone. Going forward, investors should watch whether future profits are increasingly driven by the core business rather than accounting adjustments or one-time gains.
3. This Is No Longer Just an Indian Hospitality Business
Many people still associate OYO with budget hotels across Indian cities. That is no longer the complete picture.
Following its acquisition of G6 Hospitality, the company behind the Motel 6 and Studio 6 brands in the US and Canada, Oravel Stays has become a much more geographically diversified business.
According to the UDRHP, North America generated ₹12,022.51 crore of Gross Booking Value (GBV) during the first nine months of FY26, compared with ₹4,712.83 crore in the entire FY25. More importantly, North America now contributes 52.39% of the company's global GBV.
Gross Booking Value (GBV) is the total value of bookings customers make through the platform, after cancellations but before discounts.
This changes how investors should think about the business.
The company's future is no longer tied only to India's travel industry. Its performance will increasingly depend on travel demand in North America, consumer spending overseas, and broader global economic conditions.
A geographically diversified business has its advantages. It reduces dependence on a single market and creates multiple growth opportunities. But it also means investors need to keep an eye on developments outside India, something they may not typically do while evaluating a domestic hospitality company.
4. The Filing Also Highlights Risks Investors Should Keep an Eye On
While the company's financial progress is encouraging, the filing also highlights a few developments that investors should monitor.
Traditionally, OYO followed an asset-light approach, acting mainly as a technology platform that connected travellers with hotel owners.
However, the company is now rapidly expanding its company-operated CheckIn premium serviced hotels in India.
The scale of this shift is significant. These properties contributed 49.29% of India's Gross Booking Value (GBV) during the first nine months of FY26, compared with just 2.61% in FY24.
This suggests Oravel Stays is taking greater control over the customer experience instead of relying entirely on partner hotels.
The strategy could help improve service quality, strengthen the brand, and generate higher revenue per property. However, it also comes with higher operating costs, such as leasing hotels.
As the business expands, investors should watch whether these additional costs translate into stronger revenues and sustainable profitability. The success of this strategy will play an important role in shaping the company's long-term growth.
5. The Most Important Questions Are Still Ahead
The UDRHP is an important milestone, but it is not the final step in the IPO process.
Before the issue opens, the company will file its final Red Herring Prospectus (RHP), which will disclose the official price band, subscription dates, and other key details.
Until then, retail investors should avoid getting carried away by Grey Market Premium (GMP) discussions or listing gain speculation.
Instead, the more meaningful questions are:
- Can the company continue improving its operating performance?
- Does the planned debt repayment strengthen the balance sheet as expected?
- Can its international business maintain its growth momentum?
- Does the final IPO valuation fairly reflect the company's improving financial position?
These are the factors that will ultimately shape the investment case.
Our Take
The updated IPO filing suggests that Oravel Stays is no longer asking investors to back a high-growth startup with an unproven business model. Instead, it is presenting itself as a more mature company that has improved its operations, expanded its global presence, and plans to use nearly 75% of the ₹6,650 crore IPO proceeds to reduce debt and strengthen its balance sheet.
At the same time, the filing also highlights why investors should look beyond the headline numbers. While revenue growth and operating performance have improved, a significant portion of the reported profits has come from deferred tax credits. That makes it important to assess whether future earnings are increasingly driven by the core business rather than accounting adjustments.
Ultimately, the IPO should be evaluated not just on recent financial improvements but on whether the company can sustain its operating momentum, successfully execute its evolving business model, and justify the valuation it seeks from public investors. The upcoming quarterly numbers will provide the clearest picture of whether these improvements support the company's next phase of growth.