Oyo's share dips to Rs 55 despite strong second quarter profits

Synopsis

Oyo's shares are currently trading at a discounted valuation despite the company reporting strong financial performance and projecting significant EBITDA growth. Investors are closely monitoring the market and anticipating a successful IPO in the future, driven by Oyo's impressive profitability and recent acquisition of G6 Hospitality.

The shares of Oravel Stays Limited, which owns and runs the brand Oyo are being traded in the Rs 53 to 55 range, translating to a valuation of nearly $ 4.4 billion.

This is 28% below the high of Rs 77 per share it had touched in February 2024. The price had dipped to Rs 38 in June this year during the Rs 1457 crore Series G primary raise Oyo had conducted at Rs 29 per share. Since then the shares have been on an upswing, but haven't been able to match the high achieved earlier this year.

Oyo reported a Rs 158 crore net profit in quarter two of financial year 2025 and a financial year 2026 projected EBITDA of Rs 2000 crore. At Rs 291 crore, Oyo has already surpassed in half a year, FY2024’s full year profit of Rs 229 crore.

Despite the improved financial performance investors are watching the market closely due to sustained FII selling in the listed equity space. Oyo has a high likelihood of launching an IPO in the future, and investors are hoping to make a big upside post listing. At the current valuation, the stock trades at a strong discount versus the earnings multiple currently enjoyed by other new age platforms such as Zomato and Policybaazar.

"We have seen a lot of family offices and HNI action in the private space after the bumper post listing gains from quite a few tech companies. Since most such issues are getting heavily oversubscribed, a lot of informed investors are choosing to enter at a pre-IPO stage to get the allocation that they want, and to also benefit from appreciation during both listing and post listing," said Viral Mehta, product lead - product development at IIFL Securities who is involved in unlisted shares transactions.

"As per Oyo, it will register an over Rs 2000 crore EBITDA in financial year 2026, making investors expect a significant upside to match the multiple that other such high growth new age companies are currently being priced at in the listed space," he added.

Oyo has recently announced its acquisition of G6 Hospitality, the economy lodging franchisor and parent company of the Motel 6 and Studio 6 brands, from Blackstone Real Estate for $525 million, in an all-cash transaction.

The company is expected to cross Rs 2,000 crore in EBITDA in financial year 2025-26 with Motel 6 adding to its topline. According to reports, Motel 6 will add over Rs 630 crore to its EBITDA in the coming financial year, which will be the first full year of its integration.

Earlier, Ritesh Agarwal, Founder and CEO of Oyo had shared with employees in an employee town hall that Oyo’s H1 profits are a stark turnaround from the Rs 91 crore loss reported in the same period in the previous fiscal year. He also shared that the company projects its profit after tax to surge over three fold to Rs 700 crore in the upcoming fiscal year 2025 versus financial year 2024.

Oyo had reported its first-ever profit after tax (PAT) of Rs 229 crore, according to the company's annual report. The company also reported eight consecutive quarters of positive Adjusted EBITDA. Oyo's Adjusted EBITDA grew by 215% to reach Rs 877 crore in financial year 2024, up from Rs 277 crore in financial year 2023.

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