After achieving its first-ever profitable quarter in July-September, Oyo plans to prepay a substantial portion of its debt, amounting to ₹1,620 crore, through a buyback process. Scheduled for repayment in June 2026, the buyback initiative involves repurchasing 30% of Oyo’s outstanding Term Loan B (TLB), fully funded with cash on the balance sheet and from a cash collateral account.
The move follows Oyo’s notable achievement of a quarterly profit of ₹16 crore in the September quarter of FY23-24. If successful, the buyback is expected to significantly reduce Oyo’s interest outgo by ₹225 crore per annum.
The buyback will be conducted at par value through a public bidding process open from November 14-18. In case the bid exceeds the specified amount, Oyo will repurchase the loan on a pro-rata basis.
Oyo’s debt paper closed at 90 cents per dollar on November 13, according to trade terminals. The company had previously announced achieving operational profitability in FY23, with an adjusted EBITDA of ₹277 crore. For the current financial year, Oyo anticipates an adjusted EBITDA of nearly ₹800 crore.
Founder Ritesh Agarwal revealed to employees that Oyo had turned cash flow positive in the fourth quarter of FY23 and was expected to end the quarter with a surplus cash flow of around ₹90 crore.
In FY23, Oyo’s adjusted gross profit margin rose to 43% of revenue, marking a 23% improvement in adjusted gross profit, which reached ₹2,347 crore compared to ₹1,915 crore the previous year. This strategic move to prepay debt aligns with Oyo’s financial stability and positive trajectory, signaling a significant step in the company’s financial management and growth strategy.
