Moody’s Ratings has shifted the outlook for OYO parent Oravel Stays to positive, citing a jump in FY26 EBITDA to ₹2,630 crore. The travel tech firm is eyeing a ₹6,650 crore IPO, with plans to use ₹5,000 crore to reduce its debt. Investors will be tracking the company’s ability to maintain this positive cash flow trend and the execution of its share sale plans.
Moody’s Ratings has updated its outlook for Oravel Stays, the parent company of the travel tech platform OYO, moving it from stable to positive. This change comes as the company shows a notable improvement in its financial performance, specifically a rise in operating profit (EBITDA) to ₹2,630 crore for FY26, up from ₹1,080 crore in the previous year. The rating agency has maintained the company's B2 corporate family rating, which is a level often associated with speculative-grade debt, but the outlook upgrade reflects growing confidence in the firm's operational stability.
This shift is significant for Oravel Stays as it prepares for a proposed initial public offering (IPO) aimed at raising ₹6,650 crore. A key part of the company’s strategy involves using ₹5,000 crore of the IPO proceeds to pay down debt. For years, the company has grappled with high debt levels and significant cash burn as it expanded its global footprint. By focusing on debt reduction, the company aims to clean up its balance sheet and improve its financial profile before listing on the stock exchange.
The improvement in cash flow is a major change for the company, which spent years investing heavily to capture market share in the budget accommodation sector. Moody’s expects that the company will generate enough cash to cover its operating costs and future expansion plans, provided the current financial trajectory continues. However, the path to a successful market debut is not guaranteed. The company still faces operational risks in its diverse markets across India, Europe, and the United States, where regional volatility can impact demand.
Historically, OYO has faced challenges related to valuation corrections and the difficulty of managing a large, complex network of budget hotels. While the current numbers show a move toward profitability, the travel tech and hospitality sector remains highly competitive, with rivals ranging from global platforms like Airbnb to established hotel aggregators like MakeMyTrip. The company's unique aggregator model, which relies on technology to manage hotel bookings and inventory, requires constant investment to keep up with user expectations and industry standards.
Investors should monitor a few critical factors moving forward. The most important is the actual execution of the IPO, as the timeline and market conditions are uncertain. Additionally, whether the company can sustain its EBITDA growth without aggressive spending will be a key question for long-term financial health. The effectiveness of the debt reduction plan will also be a major point to watch, as it directly impacts the company’s ability to operate with more flexibility in the future.