Senior-level officials of the IPO-bound hospital start-up Oyo have met with representatives of the Securities and Exchange Board of India (SEBI) to provide updates on the company's progress, as reported by The Economic Times, citing sources familiar with the matter.
Oyo is hopeful of obtaining IPO approval soon from SEBI and is said to have provided information to the regulator regarding the readiness to repay $200 million of the company's Outstanding Term Loan B (TLB).
Following the hospitality chain's first-ever profit during the July-September quarter, the company announced plans to prepay a significant portion of its debt amounting to Rs 1,620 crore, acquired via a buyback process.
The company has committed to repaying this debt by June 2026. According to media reports, Oyo will use cash from its balance sheet and a cash collateral account to settle the debt amount.
The ET report further added that senior executives of the company have also shared advancements made in Oyo's bottom line and other parameters over the last four quarters.
Sources familiar with the matter mentioned that the company has been advised to address SEBI's concerns promptly, as favorable capital market conditions could benefit its IPO prospects.
Oyo's founder and CEO, Ritesh Agarwal, stated during a town hall last week, reported by PTI, that he anticipates a consistent increase in Profit After Tax (PAT) after doubling it sequentially in Q3 FY24 to Rs 30 crore. He also mentioned that the company has recorded a two-fold increase in profit.
Agarwal informed the staff that the company achieved an adjusted EBITDA of Rs 750 crore in FY23 and expects to reach an adjusted EBITDA of Rs 1,000 crore in FY24, surpassing its earlier projection of Rs 800 crore for FY24.
The move by Oyo to repay its debts has been widely praised by global credit rating companies. Fitch and Moody’s have described Oyo’s decision to repurchase its outstanding debt as positive.