Home / Business and Economy / Fitch Upgrades Oyo Parent, Citing Improved Finances
Fitch Upgrades Oyo Parent, Citing Improved Finances
29 Sep
Summary
- Oyo's parent company outlook revised to Positive by Fitch.
- EBITDA leverage expected to drop significantly by FY28.
- Company achieved positive free cash flow in FY26.
Fitch Ratings has upgraded the outlook for Oyo's parent company, PRISM (Oravel Stays Limited), from Stable to Positive, while affirming its 'B' ratings. This revision is driven by improved leverage, enhanced cash generation, and sustained revenue growth.
Analysts project PRISM's EBITDA leverage to decrease to 3.8x by FY28, down from 5.2x at the close of FY26. This forecast does not incorporate potential funds from the company's upcoming Initial Public Offering (IPO).
The agency noted PRISM's significant operating momentum, including a 50% revenue increase in FY26, and anticipates continued growth of 9%-14% in FY27-28. Furthermore, PRISM achieved positive free cash flow in FY26 and is expected to sustain this, benefiting from its growing EBITDA and low capital expenditure needs.
PRISM’s expansion into developed markets through acquisitions like G6 Hospitality in the US and CheckMyGuest in Europe has bolstered its revenue. These entities, along with PRISM's Homes business, are estimated to have contributed nearly 40% of the company's total revenue in FY26, increasing EBITDA from these key regions.
The company has proposed using up to Rs 49.9 billion from its IPO to repay its Term Loan B. Such a move could reduce PRISM's gross EBITDA leverage to below 2.0x and net leverage below 1.0x, significantly decreasing its overall indebtedness.
