Thread by @aditya_kondawar

Oyo DRHP takeaways - Everything you need to know!

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#IPOwithJST #oyo

1/n -

About Oyo -

- First of all, Oyo is a foreign-owned and controlled company.
- OYO gets hotels and homeowners to list their properties on the platform. They market such properties on the OYO app and their ecosystem
- They help book hotels and vacation homes.

2/n -

- OYO was co-founded by Ritesh Agarwal in May 2013. Since then, Oyo has raised 16,000 crores in VC money and Rs 5,000 crore in debt, totaling 21000 crores!
- Early investors, VCs such as Sequoia Capital and Lightspeed, have already cashed out, making cool returns.

3/n -

- SoftBank Vision (Cayman) Ltd, with a 46.62% stake is the “investor promoter” for the purpose of the IPO.
- Ritesh Agarwal holds 8.21% in his name and 24.95% through RA Hospitality Holdings, an entity in the Cayman Islands.

4/n -

- What does Oyo Actually do? Don't let the Img 1 confuse you, in simple words, it is an aggregator that lets you book hotels and vacation homes.
- Google Trends for Aggregators
- As of FY21, Oyo had 157,344 storefronts across 35+ countries listed on their platform.

5/n -

- As of Sept 2021, they had the largest footprint in terms of hotel storefronts in India and SEA and the 2nd largest footprint in Europe. (Core Growth Markets.)

- 9.2 million OYO Wizard members as of FY21 (Loyalty program)

6/n -

- Issue Details

Fresh issue of Rs 7000 Cr, OFS of 1430 Cr
Pre IPO of 1400 cr may be done

- Objects of the issue

2441 Cr debt payment
2900 Cr organic and inorganic opportunities funding

- Selling Shareholders

7/n -

Oyo Townhouse Restructuring - A 'Costly' solution

- In 2020, they went on a big restructuring exercise to shut down their self-operated Townhouse business.
- The company spent a lot of its time, money, and energy in building this.

8/n -

- model = hotels would be completely managed by their owners or franchisees of the Oyo brand.
- Back to restructuring, They removed 1000s of employees. 407 cr was spent on this covering termination costs of contracts, severance pay, inventory, + other asset write-downs

8/n -

Let's see how Oyo recognizes revenue -

It takes Gross booking revenue as Revenue in the hotel segment

Ideally, it should note commissions as revenue as -

GBV = Oyo commission + patron’s commission (hotel owner) + direct/indirect costs

Shocking!

9/n

Surprising that it notes commissions as revenue in the other 2 segments.

Also in segment breakup, it just gives India revenue and outside India revenue.

This doesn't tell much!

Note - Only 25% of revenue comes from India

10/n

Since May 2013, Oyo has raised Rs 21000 Cr (16000 cr of VC money and 5000 Cr in debt)

Losses (Rs Cr) -

FY19 - 2525
FY20 - 12800
FY21 - 3929

Has 95 subsidiaries (109 total, 95 operational) and 41 (52 total, 41 operational) joint ventures

Amusing!

11/n

Financials (Rs Cr)

Revenue -

FY19 - 6518
FY20 - 13413
FY21 - 4157

Losses -

FY19 - 2525
FY20 - 12800
FY21 - 3929

Losses reduced in FY21 as other expenses pulled back (like every other Tech IPO company did, Img 2)

No cash flows, nothing else worth talking about.

12/n

- Also, there were exceptional items, which totaled Rs 1,644 Cr in FY20 and Rs 1001 Cr in Fy21.

- Rs 2644 Cr of exceptional items in just 2 years – to put that in perspective their revenue was 4157 cr in FY21, 50% of revenue as exceptional costs!

13/n

Conclusion -

The DRHP was very ambiguous and I had to rely on outside sources to research!

What will happen with Oyo in the mid to long-term future is something that no one knows!

Valuations have no meaning here, so let's chuck that!

Thanks for reading!

Also , a fun fact on Oyo -

https://twitter.com/aditya_kondawar/status/1444973095802982400

Stay tuned for more :)