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Hospitality major, OYO is likely to delay its IPO by another quarter as the market regulator Securities & Exchange Board of India (SEBI) has asked the company to update additional sections in its Draft Red Herring Prospectus (DRHP), such as updated Risk Factors, KPI’s, (Outstanding Litigations, Basis for Valuation) etc.
The company was earlier expected to launch the IPO in the first half of 2023. The process of filing additional updates are likely take around 3 months. A source close to the company said, “It would only be prudent to expect investors to put in money based on the latest information, and we have been needed to provide any latest disclosures at the appropriate pre-IPO stage. This is the most sensible course of action now. It may also shift the IPO plans by 2-3 months, but we will be able to show a full financial year of EBITDA profits in the process.”
OYO had recently submitted through an addendum to the DRHP, the first half of FY 2022-23 financial numbers to SEBI citing that potential investors need to be made aware of the material uptick in its business performance since its IPO application in September 2021. It had reported its maiden positive adj. EBITDA of ₹63 crore, a 24 per cent year-on-year increase in revenue and 69 per cent increase in monthly booking value (GBV per month) for its hotels in first 6 months of FY2023.
SEBI has asked the company to now update other material information in the same vein. SEBI has mentioned in its letter to OYO, “The disclosures contained in present DRHP do not take into account the material changes/disclosures arising from updated financial statements as filed through addendums leading to the revised period for disclosures which in turn leads to necessities to make material updates in Risk Factors, Basis of Offer Price, Outstanding Litigations and update other relevant sections of DRHP.”
SEBI’s move seems to be in line with its expectation of higher levels of transparency in the IPO process. Lately, it has asked companies to share more KPIs and the basis for the pricing of IPOs. In its meeting with bankers earlier this week, it also shared steps to reduce the IPO processing time which has increased to 113 days and has informed that it will be returning the application to the IPO bankers to provide the additional information in a timely manner.
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