Fitch revises OYO’s long-term issuer rating to ‘positive’
The outlook revision reflects OYO on track to generate positive EBITDA and cash flow from operations in FY24, led by an ongoing demand recovery
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New Delhi: Fitch Ratings on Wednesday said it has revised the outlook on Oravel Stays Ltd's (OYO) long-term foreign- and local-currency issuer default ratings to 'positive' from 'stable', while affirming the ratings at 'B-'. The ratings agency also said it has affirmed the rating on the $660-million senior secured term loan facility due 2026, issued by OYO's fully owned subsidiary, Oravel Stays Singapore Pte Limited, at 'B-'.
“The outlook revision reflects our view that OYO is on track to generate positive EBITDA and cash flow from operations (CFO) sustainably. This follows positive EBITDA in every quarter of the financial year ended March 2023 (FY23), which is the first year of profits since OYO's incorporation in 2012,” Fitch Ratings said in a statement. It further said, “We expect significant growth in its EBITDA in FY24, led by an ongoing demand recovery in the travel and tourism industry, the company's stable gross margins, and reduction in operating costs.”
The rating reflects OYO's asset-light business model “that benefits from minimal capex needs, largely exclusive distribution rights, pricing control over storefront inventory, fixed revenue share, etc,” it added.
