Indian hospitality company Oyo has pre-filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) under the confidential pre-filing route, according to The Economic Times. 

The filing, which was submitted on Friday, will allow OYO to explore an initial public offering (IPO) and offers the firm greater flexibility on the size of the issue during the initial stages of the process. It also allows the company to change the primary issue size by up to 50 per cent until the updated DRHP stage. The confidential pre-filing route was introduced by SEBI in November 2022 and offers companies the option of submitting documents for review that will not be available in the public domain.

According to an anonymous source, OYO has reduced the issue size to between $400m and $600 million, which will be a primary issuance aimed at repaying most of the company’s debt. The IPO is expected to take place around Diwali, assuming SEBI approves the plan. 

Under traditional SEBI guidelines, companies must launch an IPO within 12 months of receiving SEBI approval, but under confidential filing, firms have up to 18 months from the date of filing to float an IPO.

OYO founder Ritesh Agarwal told employees in an internal town hall meeting that the company expects to record adjusted EBITDA of approximately Rs 800 crore ($108m) in the fiscal year 2024, and that its current cash corpus is Rs 2,700 crore. The company’s revenue for the fiscal year 2023 is expected to reach over Rs 5,700 crore, a 19 per cent increase from the previous year.