OYO delays IPO again; SoftBank cites weak earnings

126

OYO delays IPO again, marking the third time in four years that the Gurugram-based hospitality tech giant has withdrawn its plans to go public. Despite turning a net profit of Rs 229 crore in FY24, SoftBank, the largest shareholder in OYO, has reportedly urged the company to hold off its proposed October 2025 IPO, recommending a delay until March 2026. The Japanese investment behemoth, which owns more than 30% in OYO, has voiced concerns over the company’s overall earnings profile, despite notable improvements in profitability and revenue growth.

Founder and CEO Ritesh Agarwal, who borrowed $2.2 billion in 2019 to raise his stake in OYO, has been pushing for an early IPO to fulfil repayment commitments tied to that loan. However, with global market volatility and tepid investor sentiment due to geopolitical and tariff tensions, the pressure to delay has mounted. SoftBank, under Masayoshi Son, is likely to support an extension on Agarwal’s repayment deadlines in exchange for pushing back the listing timeline.

OYO’s initial IPO plans in 2021 sought a valuation of $12 billion, but that figure has now been revised to around $7 billion. The startup refiled its IPO draft with SEBI in March 2023, only to withdraw it again in May 2024. Although OYO achieved profitability, its fluctuating revenues and shifting market valuations have made stakeholders cautious.

This development adds OYO to the list of Indian startups delaying or resizing IPOs amid uncertainty. Others like Ather Energy and LG Electronics’ Indian unit have similarly paused their plans. While OYO maintains its growth in the budget hospitality space with strong operational metrics, the lack of stable earnings remains a key bottleneck in reaching public markets. This makes Oyo delays IPO again.

1. Introduction to OYO’s Business Model and Services

1.1 OYO Rooms, officially Oravel Stays Ltd., is a tech-driven hospitality platform founded in 2013 by Ritesh Agarwal. It focuses on budget hotels, offering a standardized and affordable stay experience through tech integration.

1.2 The company provides full-stack technology to small hotel owners, helping them streamline operations, boost occupancy, and manage revenue effectively.

1.3 OYO earns its revenue primarily through commission-based models, SaaS subscriptions, and franchise partnerships. It aggregates rooms from budget hotels and standardizes services such as booking, pricing, and customer service.

1.4 While its primary market is India, OYO has expanded globally with a presence in Southeast Asia, Europe, and the United States, though international operations have been scaled down over time.

2. Founding Team and Funding Journey

2.1 Ritesh Agarwal, the founder and CEO, became one of the youngest entrepreneurs in India to enter the startup limelight. His vision was to revolutionize budget hospitality using technology.

2.2 OYO has raised over $4 billion since its inception from investors like SoftBank, Lightspeed Venture Partners, Sequoia Capital, Airbnb, and Microsoft.

2.3 In 2019, Ritesh personally borrowed $2.2 billion to increase his shareholding in OYO, which SoftBank guaranteed. The loan terms had IPO-linked repayment obligations, creating pressure on the company to go public.

3. OYO Delays IPO Again: What Happened?

3.1 OYO delays IPO again, marking the third time it has retracted its plans to go public. Initially aiming for 2021, the IPO has been pushed to March 2026 now.

3.2 According to Bloomberg, SoftBank has advised OYO to wait for a more solid earnings trajectory before listing. The investor is worried about valuation risks and market timing.

3.3 The October 2025 IPO plan was already tentative, but SoftBank’s feedback sealed the postponement.

3.4 In May 2024, OYO withdrew its IPO draft from SEBI after re-filing it in March. The new listing, if it happens in 2026, could value OYO at $7 billion, nearly 40% less than its earlier target.

4. Financial Performance and Market Trends

4.1 In FY24, OYO reported a net profit of Rs 229 crore—its first full-year profit. However, revenue dipped slightly from Rs 5,464 crore in FY23 to Rs 5,389 crore.

4.2 Q3 FY25 showed promising numbers with a Rs 166 crore profit and 31% year-on-year revenue growth.

4.3 Despite profitability, inconsistent top-line growth and valuation markdowns are pushing investors like SoftBank to adopt a conservative approach.

4.4 The IPO market globally is affected by economic headwinds, making it riskier for tech startups to list without clear long-term financial performance.

5. The Loan Connection and SoftBank’s Influence

5.1 Ritesh Agarwal’s $2.2 billion loan comes with terms that required initial repayments starting December 2024.

5.2 He aimed for an early IPO to facilitate repayment, but now the delay requires renegotiation.

5.3 SoftBank’s founder Masayoshi Son is reportedly willing to back an extension, provided the IPO is deferred to ensure stronger financial results.

5.4 The lender consortium may also support this move, depending on improved earnings visibility.

6. Competitive Landscape and Industry Context

6.1 OYO’s competitors in India include Treebo, FabHotels, and MakeMyTrip in the budget hospitality segment.

6.2 Unlike its peers, OYO has focused heavily on technology, automation, and operational standardization.

6.3 The broader Indian startup ecosystem has seen multiple IPO delays recently. Startups are waiting for better macroeconomic conditions before making a public debut.

6.4 Other firms like Ather Energy and LG Electronics’ Indian arm have also postponed or downsized their IPO ambitions.

7. Learning for Startups and Entrepreneurs

7.1 Rushing into IPOs without sustainable profits can backfire. Stakeholders need assurance of long-term financial stability.

7.2 Founders should balance personal stake-building efforts with the company’s public readiness. Borrowing heavily can create pressure later.

7.3 Listening to investors, especially large ones like SoftBank, is vital. Timing can often matter more than ambition.

7.4 Global events and policy changes, like tariff issues, can impact local IPO plans significantly.

7.5 A phased and transparent communication strategy helps maintain stakeholder trust during critical delays.

About The Startups News

When it comes to decoding IPO trends, founder strategies, and investor dynamics in India’s tech and hospitality sector, The Startups News is your trusted partner. We provide reliable, in-depth reporting on startup fundraising, financial shifts, and business model pivots. From detailed startup profiles to breaking IPO developments, our newsroom covers what truly matters for the Indian startup ecosystem. To stay ahead in the dynamic world of business funding and startup policy, follow The Startups News at thestartupsnews.com.