Fitch Ratings has revised the outlook on Oyo parent Prism's long-term foreign and local-currency issuer default ratings (IDRs) to 'positive' from 'stable', reflecting its view that Oyo will deleverage driven by EBITDA growth. According to reports from Business Standard, the parent entity of the hospitality major has been re-named to Prism from 'Oravel Stays'. Fitch has also affirmed the rating on the $830 million senior secured term loan issued by its fully-owned subsidiary, Prism Singapore Pte Limited, at 'B' with a Recovery Rating of 'RR4'. The issuance is unconditionally and irrevocably guaranteed by Oyo and certain other subsidiaries within the group.
Fitch expects Oyo's revenue to rise by 9-14 per cent in FY27-28 after growing by 50 per cent in FY26. As reported by Business Standard, Prism reported an over four-fold rise in net profit for 2025-26 financial year to ₹994 crore, which included a ₹678 crore deferred-tax credit. Consolidated revenue from operations increased 49.7 per cent to ₹9,358 crore and EBITDA more than doubled to ₹2,594 crore last fiscal. The ratings agency expects Oyo's EBITDA margin and scale to improve, benefiting from operating benefits of scalability and competitive cost basis in India. Fitch anticipates Oyo's revenue and EBITDA margin to improve, leveraging its technology platform and market opportunities.
Fitch highlighted Prism's operating momentum, including 50% revenue growth in FY26, and expects the company to maintain its growth trajectory. According to The Economic Times, the agency expects EBITDA leverage to decline to 3.8x by FY28 from 5.2x at the end of FY26, even without factoring in proceeds from the proposed IPO. The ratings agency also highlighted the improvement in Prism's cash generation, noting that the company turned free cash flow positive in FY26. Fitch expects Prism to maintain positive free cash flow over the next two to three years, supported by its growing EBITDA base and the relatively low capital expenditure requirements of its asset-light business model.
Prism is seeking to raise up to ₹6,650 crore through a fresh issue of equity shares, planning to deploy a major portion of its IPO proceeds towards reducing its debt burden. According to the Updated Draft Red Herring Prospectus (UDRHP) filed with Sebi in June, as reported by Business Standard, the company plans to use up to ₹4,990 crore to prepay the Term Loan B. Fitch expects the prepayment to reduce Oyo's EBITDA gross and net leverage to below 2.0x and 1.0x respectively, though the company is unlikely to operate at that leverage profile. The rating case does not factor in the potential proceeds from the company's IPO, which if completed will accelerate Oyo's deleveraging.
Fitch pointed to Prism's expansion in developed markets following the acquisitions of G6 Hospitality in the US and CheckMyGuest in Europe. According to The Economic Times, the agency estimates that G6 Hospitality and Prism's Homes business together contributed close to 40% of the company's revenue in FY26. The integration of G6 Hospitality and CheckMyGuest increased Oyo's EBITDA from the developed US and Europe markets. Fitch believes Oyo is likely to use the improved rating headroom to pursue inorganic growth opportunities or raise shareholder return, with the company likely to use the improved rating headroom to pursue inorganic growth opportunities or raise shareholder return.
