OYO

Dr.Rilina Banerjee
 URPOSE
PURPOSE OF THE STUDY
THIS STUDY RESEARCHED THE RELATION BETWEEN THE GIVEN COMPANY OYO AND ITS BUSINESS
MODEL AND VARIOUS DATA INTERPRETATION HAS BEEN DONE TO GET TO THE GIVEN CONCLUSION.
THIS IS A COMPARATIVE TYPE OF PAPER WHERE REFERENCES FROM VARIOUS WEBSITES AND PAPERS
HAVE BEEN CONSIDERED TO REACH THE REQUIRED ANSWER. THE PAPER EXAMINES THE PRE-IPO
DETAILS OF THE COMPANY OYO OR PREFERABLY NAMED AS ORAVEL STAYS PRIVATE LIMITED. THE
EQUITY SHARES OFFERED THROUGH THE RED HERRING PROSPECTUS ARE PROPOSED TO BE LISTED ON
THE STOCK EXCHANGES. THE COMPANY HAVE RECEIVED IN-PRINCIPAL APPROVALS FROM BSE AND NSE
FOR THE LISTING OF THE EQUITY SHARES PURSUANT TO LETTERS.. THIS PAPER DOES A BACKGROUND
STUDY INTO THE COMPANY AND ANALYSES THE PROFITMAKING FACTORS WITH KEEN INTEREST INTO
THE BUSINESS STRATEGIES FOLLOWED BY VARIOUS DESCRIPTION AND PROOFS FROM THE RELATED
COMPANIES BALANCE SHEET, PROFIT LOSS STATEMENT AND VARIOUS FINANCIAL RATIO ANALYSIS ARE
DONE TOO. A CORRELATION WITH MANY DIFFERENT COMPANIES COMPROMISING THE SAME BUSINESS
MODEL HAS BEEN SHOWN FURTHER INTO THE PAPER AND VARIOUS FUNDING, ACQUISITION AND
FUTURE PROSPECTS OF THE COMPANY IS DISCUSSED.
 INTRODUCTION
INTRODUCTION
OYO IS A GLOBAL PLATFORM THAT EMPOWERS ENTREPRENEURS AND SMALL BUSINESSES WITH HOTELS AND HOMES BY
PROVIDING FULL STACK TECHNOLOGY THAT INCREASES EARNINGS AND EASES OPERATIONS. BRINGING AFFORDABLE
AND TRUSTED ACCOMMODATION THAT GUESTS CAN BOOK INSTANTLY. OYO’S SUCCESS STARTED AFTER 2013 WHEN IT
BEGAN ITS SERVICES IN INDIA AND NOW AFTER EIGHT YEARS OF FOUNDATION IT HAS DEVELOPED ITS CIRCLE
ENGULFING IN 800 CITIES IN MORE THAN 80 COUNTRIES AROUND THE WORLD. THE COMPANY OPENED UP ITS CIRCLE
INTERNATIONALLY IN 2018 WHERE IT STARTED ENTERING THE MARKETS OF UK, UAE, DUBAI, CHINA, SINGAPORE,
INDONESIA ETC. IN 2019 OYO EARNED 951 MILLION DOLLARS AN INCREASE OF 740 MILLION DOLLARS, 405 TIMES MORE
THAN IN 2018. OYO OR BETTER TERMED AS ORAVEL STAYS PVT LTD. OWNS AND OPERATES AN ONLINE HOTEL BOOKING
PLATFORM CALLED OYOROOMS.COM. IT OFFERS ITS SERVICES UNDER THE BRAND NAME OYO ROOMS WITH FACILITIES
SUCH AS WI-FI, AIR-CONDITIONED ROOMS, BREAKFAST, WASHROOM, CABLE TELEVISION. IT ALLOWS A USER TO BOOK
THE HOTEL ROOM OF THEIR PREFERENCE AT A REASONABLE PRICE OF THEIR LIKING. THE COMPANY HAS STRICTLY
FOCUSED ON RESHAPING THE SHORT STAY ACCOMMODATION SPACE SINCE THEIR AFFILIATION IN 2012 AND HAVE
DEVELOPED A TWO-SIDED TECHNOLOGICAL INTERFACE PLATFORM FOCUSED ON COMPREHENSIVELY ADDRESSING KEY
MAIN POINTS OF THE OWNERS ON THE SUPPLY SIDE AND THEIR CUSTOMERS ON THE DEMAND SIDE. IT IS SUCH THAT ALL
THE PROBLEMS THAT COMES UPON THE SURFACE BE IT BAD ROOM SERVICE AND TECHNOLOGICAL MALFUNCTION GETS
MANAGED OVER THE APP ENGAGING THE OWNER FROM THE CUSTOMER SIDE OR VICE-VERSA.
 OYO’s BUSINESS
MODEL
Oyo’s business model so different from other competitors in the same
field its just that it focuses more on user experience rather than only
hotel’s room availability and prizes. Oyo has served over 180 Mn
customers in 2019 from 120+ nationalities including customers from
different segments including- • Adventure Travelers. • Leisure
travelers • Family travelers • Business travelers. It pays huge
attention towards customer experience. As unlike Airbnb which only
connects travelers to local hotels, OYO takes in full responsibility of
services of the hotels assigned that are listed in the platform. One of the
most beneficiary acceptances of Oyo is its user-friendly mobile
application that iso Simple and easy to use app for booking. Oyo has
rolled out its contactless check in feature that allows a quicker and safer
check-in experience from anywhere at any time. Reliability and speed in
finding hotels, theatres, etc. o Personalized room features and holiday
packages and discounts.
To increase its services, it even launched many other initiatives
ranging from –
• Weddingz.in: Oyo has also partnered with several banquet
halls’ vendors to allow people to book their wedding venues
through its easy booking services and within best prices
• Oyo Townhouse: Through Oyo Townhouse, millennial travelers
can get smart services for their smart needs. ‘Smart rooms’ with
specially designed beds, formulated toiletries, power sockets,
and TVs with Netflix installed are offered with 24/7 kitchen
services. ‘Smart menus’ can be ordered by a mobile application.
• Oyo Studio Stays: Through Studio Stays, people can book
rooms for their internships, jobs, or corporate stays. They can
rent rooms for either single occupancy or twin sharing.
• Oyo Homes are fully designed private homes for people who are
on their holidays.
4
 REVENUE
If OYO does not own the hotels then how does it earns its own
half to keep running the business. Well Oyo charges around a
22% of commissions every month from hotels owners.
Commissions may vary as per the services and features offered. It
charges a room reservation fee like if a room is priced at 1000
rupees per night, Oyo makes a sustainable 10-20% commission
from it and that makes their actual revenue . Then there is a
membership fees for users who subscribe to OYO wizard with fees
ranging from Rs 500-3000. Oyo also charges different companies
to place their ads on Oyo’s app and website from where it
generated a feasible revenue along with providing a place for
sponsors to promote their brands. Oyo basically charges for its
consulting services that it provides by recommending hotels,
event organization, users a place of their preference.
5
REVENUE SEGMENTATION
FY 2019 FY 2020 FY 2021

acoomodation services
commision from booking
cancellation income
other income
revenue generated from
other sources

As we can see from the above data that the revenue generated by Oyo accommodation services has had a huge part in
the revenue portion. Most of the revenue is generated from this portion. While other parts like the commission
booking has seen a growth in the FY 20-21 implying that many hotels were recommended by the Oyo app and the
commission is the pay that the hotel pays to the third party websites, apps for recommending their hotels. Another
thing which we can investigate is the cancellation income which has seen a sharp increase in the FY 21 w.r.t to the
other years. As due to the pandemic many places were restricted for travel and tourism, and we can see that
cancellation increased in the FY21.

6
 ANALYSI
S
 Here in this fig(1) the data about OYOs revenue growth
from FY 2019-21. In the year 2021 the company’s
revenue decreased by 69-70%. The covid-19 spurned a
negative impact on travel and tourism, as the
government imposed many restrictions on travel due to
the pandemic, we see a sharp decrease in the revenue
growth of the company. After the pandemic hygiene
will play an important role so the company will offer
remedies related this field and stay ahead of the
companies and so we will see an increase of revenue in
the future years.

7
 EBITDA

0
 In FY21, from the fig(2) the company EBITDA fell by 69% year over FY 2019 FY 2020 FY 2021
-1000
year. In the year 2021 the company suffered a loss of Rs 1826.94 crores in
-2000 -1680.92 -1826.94
EBITDA compared to the loss in Rs 5917.53 Cr in the year 2020. As
-3000
during the pandemic operational expenses decreased, depreciation,
-4000
amortization and other expenses reduced a ton by 70% y-o-y in FY21.
-5000

-6000
-5917.53

-7000 EBITDA

PAT
0
FY 2019 FY 2020 FY 2021

-2000
-2290.83
 As due to lower operational expenses, other expenses, -4000
-4033.98
employee benefits expenses, and depreciation and
amortization expenses, the company's started cutting off its -6000

expenditure and the overall expense reduced by 69.5% y-o-y -8000

in FY21. As a result of the above-mentioned variables, their
restated loss decreased by 64% to ₹4033.98 Cr. in FY21, -10000
compared to ₹11121.82 Cr. in FY20.
-12000 -11121.82

8
 PAT MARGIN
0
 PAT margin being calculated by dividing PAT/Total income implies that FY 2019 FY 2020 FY 2021

this ratio is an important fundamental parameter as it tells the investors the -20
-35.1

percentage of money the company earns per each rupee of revenue. Higher
-40 -82.9
net profit means that the company is more efficient at converting sales into -97

value in %
profits. But as we can see in the above figure that the margins have -60

decreased continuously from 2019-21. The margins decreased even further

-80
by 17% from 2020-21. This shows that the company has failed to earn
much from its revenue and not able to convert sales into profits. -100

-120

total asset
total asset
14108.98

 In the last 2-3 years the company’s asset has 11742.61

continuously expanded from Rs 11742 Cr to Rs 14108.98 8751.05

value in crore
Cr but due to covid-19 the long-term investment and
current assets growth declined drastically in the year
2021 to recover from the losses during the period not
much investment in assets were done.

FY 2019 FY 2020 FY 2021 9

OYO profitability and leverage ratios
 ROE here is calculated by dividing PAT/shareholders equity.
ROE
Multiplying by 100 we can look at the ROE via a percentage 0
-0.2 FY 2019 FY 2020 FY 2021
perspective. Although the company's ROE has improved -0.4 -0.263

-0.6
during the year, it remains negative. The company's equity
-0.8

has reduced because under retained earnings, the company's -1

-1.2
restated loss has increased, affecting the company's total -1.4
-1.6 -1.47
equity, which has decreased by 57%. The companies net -1.8 -1.722
-2
income also saw a drastic drop on the FY21 due to the
pandemic.
D/E RATIO
1.8 1.7

 The company’s debt to equity ratio has risen as the business 1.6

1.4
suffered loss grew affecting the total equity which fell by 57% in 1.2 1.1

the FY 21. The companies overall leverage has become high in the 1

0.8
later years as the company's overall debt has dropped, but the 0.6
0.4
D/E ratio has grown due to a decrease in equity. The company 0.4

0.2
debt decreased from 7652 Cr to 6006 Cr, but the equity decreased 0
FY 2019 FY 2020 FY 2021
from 6456 Cr to 2744 Cr in the FY 20-21. 10
COMPARISION BETWEEN COMPANY
(REVENUE COMPARISON)

 Here we can see that Airbnb being a global powerhouse in the hospitality business
generated the maximum revenue during the covid 19 period. Yatra revenue is
maximum for the 2 years because yatra not only books hotels but also flights etc.
So, during the covid-19 when the pandemic was at its peak it shows here that
yatra wasn’t able to see the booking rate as it used to before that is why its
revenue declines in the FY 21. The company OYO has reported losses in every year
of its operations since its inception. Between 2014 and 2019, OYO has posted a
consolidated net loss of Rs 3,564.4 crore. The company has posted its highest
losses during covid in the year 2020. A large part of these losses can be attributed
to the fast expansion in newer geographies and newer businesses. OYO’s market
value is threatened by the likes of Airbnb, Treebo, Zo Rooms and MakeMyTrip
(MMT). However, OYO has outshined being just a start up whereas Airbnb still
stands tall owing to the perception of being a global and veteran player in this
segment 11
COMPARISON BETWEEN COMPANY
(ROE COMPARISON)
For the year 2021 the return on equity for all the companies have
been negative corresponding the impact that covid had on these
companies .ROE of a company measures the efficiency with which
a company generates profits from each unit of shareholders equity.
But in the above graph we can see that the ROE has been mostly on
the negative side less for the OYO company implying that its total
liabilities decreased in the FY 21 and the investment in its total
assets also decreased in this year which shows us why its ROE
hasn’t decreased as much as the other companies.

12
 STRENGTH AND FLAWS
STRENGTH
• Company has 160000 storefronts across 35
countries
• Ritesh the founder of OYO is only 28 years .His
innovative mind has been the key reason for
oyo success
• The company is trying to cater to a customer
base that are very cost sensitive. The company
advertise itself as a budget brand, so if they try
to increase the price of their rooms, they will
lose the market share.
7/14/20XX Pitch deck title
FLAWS
• Poor in resolving issues with hotel owners
leading to many cancelling their contract with
OYO.
• The company has expanded so fast, it has
approximately 1,60,000 rooms in an ineffective
and inefficient manner, and they are taking
massive loss on it.
• OYO has around 14 criminal complaints going
on against its directors 13
 CONCLUSION
Although we can’t put OYO Rooms in the same league as traditional hotel chains, since it is an aggregator and a start-up, it
still needs to overcome the perception of being only for the price-sensitive customer group. It is a technology-oriented
marketplace and doesn’t have to encounter the usual challenges faced by a hotel. However, the urge to become a market
power, increase valuation and stay ahead of the curve is as-is. Besides, there are several e-commerce marketplaces such as
Yatra and Trivago in the hospitality segment operating on similar lines of networking. Even the traditional hotels and
hospitality giants are now online, and you can book your rooms within a few clicks too. Technology is hardly a disruptor
anymore. Services and perceptions are. OYO’s market value and share are threatened by the likes of Airbnb, Treebo, Zo
Rooms and MakeMyTrip (MMT).
As of now, OYO has around 14 criminal complaints going on against its directors
• OYO has been accused of collaborating with make my trip and gaining unfair advantage against its competition.
• Zostel has written to SEBI to cancel the IPO of OYO in regard to its misrepresentation in its prospectus. Zostel alleged
that OYO has misrepresented the facts in its DRHP and that the upcoming IPO doesn’t include the disclosure of a 7 per
cent stake of Zostel’s shareholders in OYO’s parent entity.
So all these negative prospect has been seen in the decline of Oyo revenue. As an investor what should be my prospect
towards investing in Oyo for the IPO. Yes one should definitely apply for IPO of Oyo for listing gains when it comes . But one
should avoid for long term holding since the company is not profitable although its business idea is different .And due to
many pending litigations any adverse judgement can affect the financials and brand image negatively. OYO spent over $3
billion in the last four years onboarding and retaining more hotels to its website. Technology remains the core component of
this unicorn start-up along with its human assets
Pitch deck title 14
 THANK YOU
 MD KABIR AHMED
 SOHAM MANDAL
 DEBASMITA DHALI

7/14/20XX Pitch deck title 15