In a significant development for the hospitality giant Oyo, founder and CEO Ritesh Agarwal is set to increase his stake in the company with a personal investment of ₹550 crore. This move, aimed at bolstering Oyo’s global expansion, will raise Agarwal’s ownership from 30% to 32% as he acquires 12.9 crore shares at ₹42.60 apiece. The transaction values the Gurugram-headquartered company at approximately ₹32,000 crore, industry sources revealed.
Strengthening Oyo’s Global Presence
The funds raised through Agarwal’s investment are expected to fuel Oyo’s recent acquisition of G6 Hospitality, the parent company of renowned brands Motel 6 and Studio 6, in an all-cash deal valued at $525 million. Announced in September, the acquisition marks a strategic step for Ritesh Agarwal’s Oyo, further solidifying its footprint in the United States, where it has been steadily expanding since its launch in 2019.
Currently operating over 320 hotels across 35 states in the US, Oyo has aggressively pursued growth in the region. In 2023, the company added nearly 100 hotels to its portfolio and plans to include another 250 hotels in 2024. The acquisition of G6 Hospitality, combined with Agarwal’s reinvestment, underscores Oyo’s commitment to scaling its operations in key international markets and enhancing its brand presence globally.
Agarwal’s Investment Reflects Confidence in Growth
Ritesh Agarwal’s latest investment, priced at a 45% premium to his last purchase in August 2024, will be taken up for approval during Oyo’s extraordinary general meeting (EGM) on December 9 as a special resolution. This is not Agarwal’s first major funding initiative; he led the company’s Series G round with an investment of ₹830 crore.
The last funding round of $175 million, spearheaded by Agarwal, saw participation from prominent family offices and private investors, including InCred Wealth, J&A Partners (the family office of Mankind Pharma promoters), ASK Financial Holdings, and star investor Ashish Kacholia. This strong backing reflects investor confidence in Oyo’s growth trajectory and strategic focus.
Robust Financial Performance Drives Optimism
Agarwal’s investment comes on the heels of a strong financial performance by Oyo. The company recorded a net profit of ₹158 crore in the September quarter, up from ₹132 crore in the June quarter. For the first six months of FY25, Oyo’s net profit stood at ₹291 crore, a significant turnaround from the ₹91 crore net loss reported during the same period last year.
Oyo’s Q2 FY25 revenue came in at ₹1,578 crore, reflecting a 12% sequential growth. Additionally, its EBITDA rose by 27.4% from the previous quarter, reaching ₹266 crore. Earlier this year, Oyo reported its first-ever profit after tax (PAT) of ₹229 crore in FY24, marking a major milestone in the company’s financial journey.
The company has also achieved eight consecutive quarters of positive adjusted EBITDA, with FY24 adjusted EBITDA surging by 215% to ₹877 crore, compared to ₹277 crore in the prior year. These consistent financial gains have solidified Oyo’s position as a robust and profitable player in the global hospitality sector.
A Promising Future for Oyo
Oyo’s ability to navigate the challenging hospitality landscape and sustain profitability highlights the company’s resilience and strategic focus. Its growing presence in the United States, coupled with ambitious expansion plans, signals a bright future for the brand. With Ritesh Agarwal’s renewed commitment and continued backing from influential investors, Oyo is well-positioned to scale new heights in the global hospitality sector.
The company’s strategic acquisitions, such as G6 Hospitality, and its focus on increasing profitability are expected to generate sustained investor interest. By leveraging its strong financial performance and expanding footprint, Oyo is set to cement its status as a leader in the hospitality industry. As the EGM approaches, all eyes will be on Oyo’s next steps in its journey of growth and transformation.