SoftBank Woes Force OYO to Push Back IPO Yet Again

The road to a public listing is rarely paved with ease, and for the hospitality behemoth OYO, officially known as Oravel Stays Ltd. and founded by Ritesh Agarwal, it has been a particularly challenging journey. OYO has recently made headlines by postponing its proposed India IPO plans for the third time.

Various reports suggest that the OYO IPO may come in March 2026. The decision came amidst the crucial considerations over achieving stronger profitability. Let's understand the story behind the OYO IPO delay.

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SoftBank’s Influence and Continuous IPO Delay

SoftBank, which is one of the most significant stakeholders in OYO, is reportedly hesitant about the timing of the IPO. They are actively pushing OYO for stronger earnings before moving forward with listing.

Meanwhile, without Softbank endorsement, any listing by OYO would face significant hurdles. It will become heavily difficult for the owner to get board approval and attract investors. The recent delay was followed by two prior unsuccessful attempts at a public market debut.

OYO scheduled its IPO for 2021 with the hopes of achieving a valuation of up to $12 billion. This move had to be suspended due to the effects of COVID-19 on the market. Another attempt in March 2023 was also not successful, but due to the confidential filing of papers with SEBI, the IPO was once again put on hold in May 2024. These two are still pointing to the same issue, which is OYO’s struggle to keep up with the appropriate operating conditions and investor expectations during its operations.

While the 2021 filing targeted that ambitious $12 billion valuation, recent reports suggest OYO might now aim for a more modest valuation, potentially upwards of $7 billion. SoftBank itself had reportedly cut OYO’s valuation to $2.7 billion in the quarter ended June 2022, a significant drop from $9.6 billion in 2021.

OYO Loan Obligations And Repayments

OYO founder Ritesh Agarwal adds a layer of personal urgency and pressure to the IPO situation.The 31-year-old tycoon has more than 30% stake in the firm; hence, in 2019, he borrowed $2.2 billion from the major creditors, including Mizuho Financial Group Inc., to buy more shares and bolster his control. This huge amount of loan was secured with personal guarantee of SoftBank’s director Masayoshi Son. 

While the loan was restructured in 2022, the first tranche remains unpaid, with a critical repayment deadline set for December 2025. Creditors have reportedly demanded repayment of $383 million from the loan package if the IPO does not occur by October. Lenders might allow more time for repayment if OYO is listed soon. 

Now, with the public offering delayed, there’s discussion that SoftBank might support Agarwal in negotiating an extension on the loan in exchange for pushing back the IPO further. The delay in the listing keeps the expected funds, intended for growth, debt reduction, and potential expansion, on hold.

Financial Performance Of Oravel Stays Ltd

Financially, OYO has shown some progress toward profitability. Agarwal stated that the company is in track for a strong revenue growth in FY2025. He also projected a profit after tax of Rs1,100 crore and an EBITDA of Rs2,000 crore for FY 2026, highlighting strong contributions from core markets like India and the United States, as well as emerging markets in Southeast Asia and the Middle East.

OYO reported a net profit of Rs230 crore in fiscal year 2024, a turnaround from a net loss of Rs1,286 crore in FY 2023, although revenue saw a marginal decline. More recent figures for the October–December quarter of FY 2025 show a significant increase in net profit and revenue year-on-year.

Strategic Initiatives Amid IPO Delays

Despite the stalled OYO listing plans, the company is not standing still. OYO is moving ahead with new business initiatives, notably a venture into the food & beverage sector under the brand name Townhouse Café. OYO plans to introduce in-house kitchens and quick-service restaurant carts at its company-serviced hotels. This initiative, expected to cover 1,500 hotels in FY 2025–26, aims to address consistent consumer feedback for in-room dining options and is expected to potentially increase customer satisfaction scores.

The decision of OYO to postpone its listing on the stock market is another example of growth vs profitability. With Softbank supporting firms to declare stronger earnings before going public and with the high debt due dates, the company led by Ritesh Agarwal is in a delicate phase in its corporate process.

The details of OYO’s IPO present both the relationship between a startup and their leading investor, as well as a common issue of demonstrating profitability and entry into the public market against the backdrop of economic conditions. The day many have been waiting to see, OYO’s listing on the stock exchange is still uncertain.

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