The OYO IPO Race: Ritesh Agarwal’s High-Stakes Bet Amid Mounting Debt

For Ritesh Agarwal, the young and ambitious founder of OYO Hotels, the clock is ticking. The startup that once revolutionized budget hospitality is now on a high-stakes sprint to go public. But this isn’t just about business expansion or brand prestige—it’s about survival. With a massive debt repayment deadline looming, Agarwal has no choice but to accelerate OYO’s long-pending initial public offering (IPO). If the company doesn’t list by October, its creditors, including Japan’s Mizuho Financial Group, expect the 30-year-old entrepreneur to personally clear a staggering $383 million in loan repayments.

Here TICE brings you key details of what can be expected from Oyo's IPO plans.

The Billion-Dollar Gamble: How OYO Got Here

It wasn’t long ago that OYO was celebrated as one of India’s most promising startups, backed by marquee investors like SoftBank and Microsoft. Founded in 2012, the company positioned itself as a game-changer in budget accommodation, offering standardized, affordable stays across India and beyond. The startup’s rapid rise saw Agarwal take an aggressive approach to ownership. In 2019, he took a $2.2 billion loan to increase his stake in OYO, betting big on his ability to scale the company further.

However, the pandemic-induced travel slowdown, financial restructuring, and multiple delays in OYO’s IPO efforts in 2021 and 2023 left the company struggling to find firm ground. Although the loan package was restructured in 2022, Agarwal has yet to clear even the first installment. Now, his creditors are running out of patience. An IPO is OYO’s best shot at keeping the business afloat and ensuring that Agarwal retains control.

Despite the financial pressure, Agarwal has been doubling down on OYO’s future. In January, his investment firm, Redsprig Innovation Partners, injected INR 550 crore (approximately $65 million) into the company. This followed an earlier funding round in August 2023, where his Singapore-based fund, Patient Capital, led a $175 million investment into OYO. The founder’s personal financial backing is a testament to his commitment—but will it be enough?

OYO’s IPO Plans: Aiming for a $5 Billion Valuation

OYO is reportedly targeting a valuation of up to $5 billion for its public listing, a figure that will be closely scrutinized given the company’s past financial struggles and market conditions. The company had previously planned an IPO in 2021, then again in 2023, but both attempts were stalled due to financial restructuring and broader economic uncertainties.

Last year, OYO also explored raising $450 million by selling dollar bonds to refinance its Term Loan B. However, the current urgency surrounding its IPO suggests that alternative financing routes have not been enough to ease its debt burden.

From Losses to Profitability: OYO’s Financial Turnaround

While OYO’s financial history has been turbulent, the company has recently managed to turn a corner. After years of losses, OYO posted a profit of INR 229.5 crore in the financial year 2023-24 (FY24), a stark improvement from a net loss of INR 1,286.5 crore in the previous year. The momentum continued in the third quarter of FY25, with profit after tax (PAT) soaring nearly six times to INR 166 crore compared to INR 25 crore a year ago. Similarly, revenue saw a 31% rise to INR 1,695 crore, up from INR 1,296 crore in the same period last year.

While these numbers indicate a positive shift, the question remains: can OYO sustain this profitability, or is it a temporary boost ahead of the IPO?

Expansion and Growth: Aiming for Global and Premium Markets

Beyond just numbers, OYO has been aggressively expanding its business footprint. The company recently acquired Motel 6 in the US, marking a significant move to strengthen its global presence. With a focus on increasing its revenue through larger ticket sizes, OYO is targeting markets like Europe and the US, where premium accommodations offer higher margins.

In India, OYO is shifting from its core budget-hotel segment towards premium and luxury offerings. In April 2024, the company partnered with SoftBank to launch a high-end hotel chain, ‘SUNDAY,’ aimed at India’s top-tier cities. It has also been expanding its Palette brand, which caters to premium hotels and resorts. These moves signal a strategic pivot towards higher revenue streams, potentially making OYO more attractive to investors ahead of its IPO.

The Road Ahead: Will OYO’s IPO Be a Success?

Despite its resurgence, OYO’s IPO is far from a guaranteed success. The hospitality sector remains unpredictable, with economic headwinds and evolving travel trends adding further complexity. Moreover, investor confidence in OYO’s long-term stability will play a crucial role in determining the IPO’s outcome.

For Ritesh Agarwal, this is more than just a business milestone—it’s a make-or-break moment. If OYO’s public listing goes as planned, it could solidify his standing as a resilient entrepreneur who navigated one of the toughest financial storms. However, any further delay or underwhelming market response could push both OYO and Agarwal into deeper financial distress.

As the October deadline approaches, all eyes will be on OYO’s next moves. Will this be the redemption story of India’s most ambitious hospitality startup, or will it be another cautionary tale of high-stakes risks in the startup world? The answer lies in the months ahead.