OYO Builds Its Tower Of Profits

When OYO stepped out of losses and emerged into profitable territory in FY24, there was more than a healthy dose of scepticism. But in the 12 months since then, the Ritesh Agarwal-led company has shown that that was not a flash in the pan.

While the hospitality giant has not filed its FY25 numbers, each quarter, OYO’s revenue performance has come under the spotlight as well as its growing profits. This week, Agarwal told employees that the revenue for the final quarter .

What exactly fueled OYO to this position, and will OYO hit the INR 1,100 Cr profit milestone by FY26 as Agarwal has claimed? But before we answer that, here’s a look at the top stories from our newsroom this week:

• While Zomato’s Hyperpure has a head start, Swiggy Assure is expected to address its shortcomings, such as a lack of flexible credit options, and pre-processed essentials. Will Swiggy outpace its arch rival?
• India is witnessing a sneaker revolution right now, with a new generation of consumers flocking to new-age sneaker marketplaces to show off their identities and personalities through a pair of trendy shoes
• Listed giant MakeMyTrip is doubling down on the personalisation of user experience at a time when the GenAI wave has taken the industry by storm, and hyper-personalisation is the new norm

How OYO Made The U-Turn

In his message to employees earlier this week, Agarwal said the 60% YoY revenue growth highlights the company’s ability to drive sustainable, profitable growth. “A key contributor to this performance has been the successful integration of G6 Hospitality, adding INR 275 Cr to our revenue,” Agarwal’s email is reported to have said.

It is pertinent to note that. While it posted a net profit of INR 229 Cr, its revenue declined 1.3% YoY to INR 5,388.78 Cr in FY24. But in FY25, the revenue growth is evident, with the total operating income expected to cross INR 6,700 Cr.

After the downturn of the pandemic years, OYO has bounced back in a significant way in the next four years, nearly doubling revenue between FY21 and FY25.

Of course, these are unaudited numbers for FY25, and as such we can expect a change in the final outcome. Even though the company has not spoken about the expenses in FY25, OYO has also claimed improving profits each quarter. A large portion of that can be attributed to the acquisition of international properties as well as the investments in new properties abroad and in smaller cities in India.

OYO Bets Big On G6

Firstly, in order to shore up its revenue and expand presence in the US, OYO for $525 Mn (around INR 4382.72 Cr) in an all-cash transaction in September last year. The hospitality unicorn expects G6 Hospitality to contribute INR 630 Cr to its overall EBITDA of INR 2,000 in FY26.

The move was aligned with OYO’s strategy to increase its presence in international markets like Europe and the US, where it earns higher revenues. The company also acquired Paris-based company Checkmyguest for INR 230 Cr in a cash and stock deal in August 2024 as it looked to push into the homestay and long-term rental property market and take on the likes of Airbnb.

Besides the US and Europe, OYO is looking to invest and expand its base of SUNDAY Hotels, eyeing 100 properties under the brand globally by the end of FY26. This is expected to draw in a host of international visitors to OYO’s house of hotel brands.

In addition to India, SUNDAY Hotels have opened in the United Kingdom, Saudi Arabia, the United Arab Emirates, Bahrain, Indonesia, Malaysia, Thailand, Philippines, and Vietnam — which shows that OYO is also diversifying its international presence and not just relying on the US market with G6.

SUNDAY Hotels, a premium brand of four-star and five-star hotels, was originally launched in May 2023 and is part of the premiumisation strategy that worked so well for OYO in FY24.

The India Story

Besides the international push, a big boost to the revenue has come from the India business, where spiritual tourism has been a big draw for OYO, particularly given the tourist rush at the recent Maha Kumbh Mela in UP. With OYO said to have reached INR 2,100 in revenue in Q4 FY25, a large part of this would have come from the Indian business and Kumbh travellers.

In early January, Agarwal OYO would be adding 500 hotels across 12 major pilgrimage destinations, particularly in Ayodhya, Varanasi, Haridwar and Puri (Odisha). Among other destinations on OYO’s radar are the likes of Amritsar, Ujjain, Nashik, Vrindavan, and Tirupati.

The CEO claimed that Ayodhya has become one of the most searched destinations, with searches up by 39% YoY on the OYO app. “This isn’t just about adding hotels—it’s about addressing real demand. With religious tourism expected to generate $59 Bn in revenue by 2028 and create 140 Mn jobs by 2030, we’re excited to contribute to this growing movement.”

Overall, Agarwal expects in FY26, which would set up the company nicely for an IPO.

On The IPO Trail

As reported a few weeks ago, OYO is being pushed to expedite its IPO plans as founder Ritesh Agarwal faces pressure from creditors to clear a looming debt repayment.

Lenders, including Mizuho Financial Group, had reportedly urged Agarwal to pay up $383 Mn, part of the debt raised by the founder in 2019.

A Bloomberg report claimed that if the company doesn’t list by October this year, the lenders want Agarwal to repay $383 Mn as part of the $2.2 Bn loan which was used to increase his stake in the company and gain more strategic control in 2019 after years of dilution.

The OYO founder has paid off a portion of the debt through secondary deals, but the company’s slow revenue growth has set some alarm bells ringing. Lenders are likely wary as OYO has turned its focus towards profitability and revenue contribution of recent acquisitions is only likely to become pertinent by next year.

A clearer look at the fundamentals for FY25 and more up-to-date unit economics nitty-gritties is warranted, which is likely to only come before OYO’s listing. The company has come to the before in 2021 and 2023, but Agarwal’s debt situation and poor market condition forced it to step back.

Now with the market having a bullish mid-term outlook, OYO is back on the IPO trail. And this time, it has the backing of a profitable business to make its pitch, which was not the case in the past. Will this turn of events propel OYO to a bumper IPO in the near future?

Sunday Roundup: Startup Funding, Deals & More

• Listed major Delhivery is acquiring rival logistics tech startup Ecom Express in an all-cash deal for INR 1,407 Cr for 99.4% equity
• Between March 31 and April 5, startups cumulatively raised $144.4 Mn across 22 deals, with the total funding for Indian startups crossing the $3 Bn mark in the first quarter of 2025

• Bringing together 350+ founders, policymakers, business leaders, and investors, The GenAI Summit By Inc42 will decode the transformative potential of AI in India’s startup ecosystem
• D2C fashion brand Snitch posted an operating revenue of about INR 520 Cr (as per unaudited numbers) in FY25, founder and CEO Siddharath Dungarwal told Inc42
• Addressing a huge audience at the Startup Mahakumbh, the commerce and industry minister said Indian startups need to move beyond convenience-oriented consumer models and focus on deeptech and IP creation

 

The post appeared first on .