OYO pre-files draught prospectus for IPO; expected to list around Diwali.OYO have submitted preliminary filings with the Sebi on September 2021.

Oravel Stays – which manages hotel tech startup OYO – on Friday pre-filed its Draft Red Herring Prospectus with stock market regulator Sebi, sources said. Sources close to the firm told PTI OYO may undertake its initial public offering (IPO) around Diwali this year.

Unlike the usual process where businesses have to launch the IPO within 12 months from the Sebi approval or final observation; through the pre-filing route, an IPO may be launched within 18 months from the date of Sebi’s final remarks.

This technique also allows flexibility to adjust the main issue size by 50 percent until the Updated Draft Red Herring Prospectus (UDRHP) stage.

Explaining the rationale for filing through the pre-filing route, a source said, “The market continues to be highly volatile globally and to an extent in India as well. Filing through the pre-filing route will give OYO some leeway on the timing of the listing, as well as on fine-tuning the issue size, basis the market conditions, to between USD 400 to 600 million, all of which will now be a primary issuance, to repay most of its debt. Though for now, an issue timing of around Diwali is likely once Sebi approves.”

OYO’s last submission to the Securities and Exchange Board of India (Sebi), in November 2022, was of its updated financial results for the first half of the financial year 2022-23, claiming that potential investors need to be made aware of the material uptick in its business performance since its initial IPO application in September 2021.

The business’s founder Ritesh Agarwal, at a staff town hall on Monday, said, “The company intends to achieve adjusted EBITDA of around ₹800 crores in FY2024, that is, the following financial year. We are taking efforts to maintain a strong cash flow and continue to operate cost-effectively.”

We have a present cash position of roughly ₹2,700 crores and we anticipate we will end up spending very little of it for existing activities. Our cash flow has demonstrated improvement and our dependency on external money has steadily lessened over time.”

He further said that this success may be ascribed to continued expansion in India, Indonesia, the US, and the UK and related optimization as well as synergies in its European holiday homes sector.

OYO had filed preliminary filings with the Sebi on September 2021 for a ₹8,430-crore IPO, comprising a new issuance of equity shares aggregating up to ₹7,000 crores and an offer for sale of ₹1,430 crores.