Moody's Ratings has revised the outlook on IPO-bound OYO parent Prism to 'positive' from 'stable', while reaffirming the travel tech unicorn's B2 corporate family rating. According to reports from The Hindu BusinessLine and Business Standard, the positive outlook reflects Moody's expectation that OYO will sustain stronger earnings and free cash flow generation over the next 12-18 months, supporting further deleveraging while maintaining very good liquidity. Sweta Patodia, a Moody's Ratings Assistant Vice President, explained that the affirmation of the B2 CFR reflects OYO's leading position in the budget accommodation sector across its key operating markets, as well as the geographic diversification of its operations across India, Europe, and the US. As reported by The Hindu BusinessLine, Moody's stated that the positive outlook reflects their expectation that OYO (formerly Oravel Stays) will sustain stronger earnings and free cash flow generation over the next 12-18 months, supporting further deleveraging while maintaining very good liquidity.
Moody's expects OYO's EBITDA to grow to around ₹3,000 crore ($315 million) over the next 12-18 months as the company continues to scale and add new storefronts to its platform. As reported by The Hindu BusinessLine and Business Standard, for FY26, OYO's EBITDA more than doubled to ₹2,630 crore from ₹1,080 crore in FY25. Higher earnings and stabilising working capital outflows also enabled OYO to generate positive free cash flow in FY26 for the first time after several years of cash burn. Moody's stated that they expect OYO to sustain positive free cash flow over the next one to two years, with operating cash flow covering near-term outflows, including planned capital expenditure. The rating agency's expectations are based on OYO's continued scaling and the addition of new storefronts to its platform, which are expected to drive further growth in the budget accommodation sector.
OYO plans to raise around ₹6,650 crore through an initial public offering (IPO), of which around ₹5,000 crore would be used to repay debt. According to The Hindu BusinessLine and Business Standard, if completed as planned, the offering would accelerate deleveraging and strengthen the company's credit profile. However, given uncertainty around the timing and execution of the IPO, Moody's base-case financial forecasts do not incorporate the proceeds or the related debt repayment. As reported by The Hindu BusinessLine, Moody's stated that if completed as planned, the offering would accelerate deleveraging and strengthen the company's credit profile. However, given uncertainty around the timing and execution of the IPO, their base-case financial forecasts do not incorporate the proceeds or the related debt repayment.
OYO was founded in 2013 by Ritesh Agarwal, who currently holds a 30.52 per cent stake in the company. As reported by The Hindu BusinessLine and Business Standard, SVF India Holdings (Cayman) Limited, a subsidiary of SoftBank Group Corp, is the largest shareholder in the company, with a 40.04 per cent stake. The company maintains its leading position in the budget accommodation sector across its key operating markets, with geographic diversification across India, Europe, and the US.
