Oyo Likely To Remain Ebitda Positive For FY24: Moody's Moody's forecast is based on a further demand recovery in the hospitality business, a higher number of storefronts on Oyo's platform and more cost reductions
By Teena Jose
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Moody's Investors Services on Monday said that the hospitality and travel tech startup Oyo is likely to see its Earnings Before Interest, Taxes, Depreciation and Amortization (Ebitda) to be positive of $50-55 million for the remaining financial year (FY24) and overall outlook to remain stable.
"The rating affirmation reflects Moody's expectation that Oyo remains on track to turn EBITDA positive (after share based payment expenses), on a full-year basis (in FY24), supported by a strong demand recovery and its various cost reductions," said Sweta Patodia, vice president and analyst at Moody's, in a statement.
Moody's also said that it has affirmed Oravel Stay Limited's (Oyo's) B3 corporate family rating (CFR) as well as the B3 rating of the backed senior secured term loan issued by its wholly owned subsidiary - Oravel Stays Singapore Pte Ltd, stated the media reports.
Moody's forecast is based on a further demand recovery in the hospitality business, a higher number of storefronts on Oyo's platform and more cost reductions. It also expectsOYO's operating costs to reduce further as the company shifts some of its roles to India, which is a lower cost location compared toEurope, and reduces its share-based payment expenses
"The stable outlook reflects our view that the company will maintain adequate liquidity buffers to support its operations until it turns cash flow positive over the next 12-18 months," Patodia added in the statement.
In addition, Moody's forecasted that Oyo's FY24 Ebitda will fall short of covering its interest expenses of around $85 million, resulting in negative cash flow from operations in the absence of any material working capital movements.
As per earlier reports, the company's founder and group CEO, Ritesh Agarwal had told the employees last month that Oyo was eying an adjusted Ebitda of INR 800 crore in FY24.
Furthermore, Agarwal had reportedly said that the SoftBank-backed startup reported an adjusted EBITDA of around INR 245 crore in FY23, marking its first profitable year since inception around 2013.
