Hospitality giant Oyo has announced its first-ever profit after tax (PAT) of Rs 229 crore for the financial year 2023-24 (FY24), marking a significant milestone in the company’s history. This profit comes after eight consecutive quarters of positive adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda).
Oyo’s adjusted Ebitda surged by 215% to Rs 877 crore in FY24, up from Rs 277 crore in FY23. Despite this impressive increase, the company’s revenue for FY24 saw a slight decline of 1.37%, totaling Rs 5,388 crore compared to Rs 5,463 crore in FY23.
The reported profits in FY24 surpassed CEO Ritesh Agarwal’s earlier estimate of Rs 100 crore, a figure initially reported by Business Standard in May. Agarwal commented on the achievement: “One big learning for me over the years is under promise and over deliver. Our audited results are published post adoption by the board. The effort of Oyo-preneurs has delivered Rs 229 crore in net profit, exceeding my earlier estimate of Rs 100 crore… Lots of improvements left to do. Proud of what we are building together.”
The company’s earnings per share (EPS) for FY24 stood at approximately Rs 0.36, a notable improvement from a loss per share of Rs 1.93 in FY23. Oyo managed to reduce its total costs by about 13%, bringing them down to Rs 4,500 crore in FY24 from Rs 5,207 crore in FY23. This reduction was achieved through a leaner cost structure, which included cutting general and administrative expenses and optimizing marketing spends while maintaining top-line growth.
Oyo’s inventory saw significant growth, expanding from 12,938 hotels in FY23 to 18,103 hotels in FY24. The company acknowledged that while these new additions will require time to reach their full revenue potential, the financial returns are expected to materialize over time. As noted in the annual report, “The new additions will require time to achieve full revenue potential, with financial returns expected to become evident, going forward. Hence, the company’s consolidated revenue from operations remained stable at Rs 5,388 crore against Rs 5,463 crore during the financial year 2022-23.”
Recently, Agarwal invested Rs 830 crore in Oyo through his wholly-owned entity, Patient Capital, which contributed to a total funding round of Rs 1,457 crore and raised Oyo’s valuation to $2.4 billion. Consequently, Agarwal’s stake in the company increased from 29.97% to 32.57%.
In terms of international expansion, Oyo has been growing across Europe, the US, Southeast Asia, and the Middle East. Europe, in particular, presents a significant opportunity for Oyo’s homes business, OVH. To capitalize on this potential, the company is issuing 79.2 million ‘Series G Fully and Compulsory Convertible Cumulative Preference Shares’ to acquire K&J Consulting, which operates the premium rental homes company Checkmyguest group from Paris.
An Oyo spokesperson highlighted the strategic value of this acquisition: “Checkmyguest has a dense presence in Paris, which is one of the most-visited cities in the world. Oyo gets to acquire premium homes inventory primarily through a share swap over a period of time, in addition to some cash outgo for the acquisition. This gets quickly offset since it’s a cash generating business.”
The deal also includes Checkmyguest’s two affiliated companies, Studio Prestige and Helpmyguest. Studio Prestige offers luxury apartment rentals, while Helpmyguest specializes in property design and renovation, providing Oyo with opportunities to upgrade and transform home interiors for a more premium appeal.