Oyo Rooms Lost Rs 6.5 Crore/Day In FY2019; What’s The Reason Behind 6X Increase In Losses?
Update: Oyo Rooms contacted us, and provided us with their statement on this news. They said: “The numbers referred to in the story are not yet audited financials. The numbers are based on a valuation report prepared by OYO’s valuers (not auditors) that includes certain provisional financials for FY 19. It may be pointed out that the valuation parameters such as share prices are based on fair market value and are not reflective of the share premium price. We would like to clarify again that these are not the final audited financials and the same will be issued later by the company along with the annual report that we issue every year and file with the RoC as well.”
Oyo Rooms, now World’s 3rd biggest hotel chain with presence in India, USA, China, Japan and host of other countries, has reported their financial numbers for financial year 2019.
As per the data received, their loses have increased by 6-times, to reach Rs 2384 crore, or Rs 6.5 crore per day.
What is the reason?
Oyo’s Financial Numbers Are Out: Rs 6.5 Crore Loss Per Day
For the financial year ended on March 2019 (FY19), Oyo Rooms reported total loss of Rs 2384 crore, which is 6-times more compared to last year.
At the same time, their revenues increased by 4-times to reach Rs 6547 crore, which was Rs 1413 crore last year.
These increases loss shared by Oyo with registrar of companies (RoC), clearly indicates that they will need to improvise a lot, before they go public via IPO.
Why Oyo Rooms’ Losses Increased By 6-Times?
Oyo Rooms’ total expenditure increased to Rs 9,027.53 crore, which is almost 8-times of their expenditure last year, at Rs 1,835.38 crore.
This increased expenditure translates to increases losses, despite a healthy 4-times increase in revenues.
Out of the total expenditure, two expenses stand out: Operational expenses increased to Rs 6131 crore, which is 5-times more compared to last year; and they spent Rs 1539 crore on employees, which is 6-times more compared to last year.
IPO Dream Is Far Away?
As per SEBI rules for listing a company on share market, for launching an IPO, a company has to show 3-years of consistent pre-tax operating profit.
Now, some reports earlier indicated that Oyo Rooms is looking for an IPO by 2022, at a valuation of $18 billion, which seems far strectched now.
As of now, Oyo is valued at $5.32 billion.
However, Oyo Rooms can still list themselves via Securities and Exchange Board of India-regulated Innovator’s Growth Platform (IGP), wherein small investors can buy Oyo shares via open market.
We have recently reported how 700 hotels from 100 cities have left Oyo Rooms, due to issues related with payments, and legal notices.
Even American hotels are now opposing Oyo Rooms.
We will keep you updated, as more details come in.