OYO has filed an updated IPO prospectus, highlighting significant operational risks, international market reliance, and ongoing legal disputes.
MUMBAI
Hospitality giant OYO, under parent company Prism Hotels and Resorts, has filed an updated draft red herring prospectus (DRHP) ahead of its highly anticipated initial public offering. While the company’s recent financial turnaround has caught investor attention, the filing reveals significant legal and operational risks that potential shareholders must carefully consider.
A primary concern is the company’s growing reliance on international markets. Revenue from operations outside India has surged, now accounting for nearly 84 percent of its total intake. The United States, United Kingdom, and Europe combined generate the vast majority of OYO’s revenue, leaving the firm heavily exposed to overseas market fluctuations. In contrast, India’s contribution to the total revenue has dropped to roughly 16 percent.
Furthermore, a long-standing legal battle with Zostel Hospitality continues to loom over the IPO. The dispute, which dates back to a failed acquisition attempt in 2015, could force OYO to issue up to 7 percent of its shareholding to Zostel or pay a massive cash settlement if a final ruling goes against them.
Finally, the document clarifies that recent profits are not purely from operating performance. While the firm reported net profits for the last two years, these were heavily boosted by deferred tax credits. In fact, before factoring in these tax benefits, the company actually recorded a loss for the 2025 fiscal year. These disclosures highlight that OYO’s path to long-term profitability remains tied to complex international and legal factors.
