Fitch Ratings has revised the outlook on OYO parent PRISM (formerly Oravel Stays) from Stable to Positive, citing improving EBITDA, stronger cash generation and the potential for lower leverage.
The development comes at an important time for OYO as the company continues to focus on profitability and prepares for its proposed initial public offering (IPO). Fitch has also retained PRISM’s long-term issuer default rating at ‘B’.
Why Has Fitch Turned Positive on OYO Parent PRISM?
According to Fitch, the outlook revision reflects expectations that OYO will continue to de-leverage, supported by EBITDA growth and management’s focus on maintaining a more conservative capital structure.
OYO reported a significant improvement in its FY26 performance. Consolidated revenue from operations increased by nearly 50% to ₹9,358 crore, while EBITDA more than doubled to ₹2,594 crore. The company also reported a consolidated net profit of ₹994 crore, compared with ₹245 crore in FY25.
However, the reported FY26 profit included a ₹678 crore deferred-tax credit, making it important to look beyond the headline PAT number when assessing the company’s underlying profitability.
OYO Revenue Growth Expected to Continue
Fitch expects OYO’s revenue to grow by 9–14% in FY27 and FY28, following the 50% growth recorded in FY26.
The ratings agency also highlighted the scalability of OYO’s technology platform and its relatively asset-light business model. These characteristics can allow the company to expand while keeping capital expenditure requirements comparatively low.
Another important factor is OYO’s presence in developed markets. The acquisitions of G6 Hospitality in the US and CheckMyGuest in Europe have increased the contribution from international operations. Fitch estimates that G6 Hospitality and OYO’s Homes business together accounted for close to 40% of revenue in FY26.
Invest in OYO before IPO
Invest in OYO unlisted shares before IPO with Precize
Deleveraging Could Be a Key Catalyst
One of the most significant aspects of Fitch’s update is its expectation of improving leverage.
Fitch expects PRISM’s EBITDA leverage to decline from 5.2x at the end of FY26 to around 3.8x by FY28, even without including proceeds from the proposed IPO. The company also turned free-cash-flow positive in FY26, with Fitch expecting positive free cash flow to continue over the next two to three years.
The potential IPO could accelerate this deleveraging.
PRISM’s proposed IPO involves a fresh issue of up to ₹6,650 crore, with the company planning to use up to ₹4,990 crore to prepay its Term Loan B. Fitch estimates that such repayment could bring gross EBITDA leverage below 2.0x and net leverage below 1.0x.
Importantly, Fitch’s current rating case does not factor in the potential IPO proceeds, meaning a successful IPO and subsequent debt repayment could provide additional balance-sheet flexibility.
What Does This Mean for OYO’s IPO?
The positive outlook comes as OYO continues to work towards its public-market plans.
A lower debt burden could potentially improve the company’s financial flexibility and reduce interest-related pressure. It could also give PRISM greater room to invest in growth, pursue acquisitions or allocate capital towards other corporate priorities.
At the same time, the IPO remains an important event to watch because the final valuation, issue structure and use of proceeds will determine how the market views OYO’s transition from a private company to a listed business.
What Investors Should Watch
The Fitch outlook revision puts several factors in focus for OYO/PRISM:
1. Sustaining revenue growth: Fitch expects 9–14% revenue growth in FY27–FY28 after the sharp increase in FY26.
2. EBITDA and cash generation: Continued EBITDA growth and positive free cash flow will be important for reducing leverage organically.
3. IPO execution: The proposed IPO and the planned use of proceeds towards debt repayment could materially influence PRISM’s leverage profile.
4. International operations: G6 Hospitality, Homes and other international businesses are becoming increasingly important contributors to the company’s revenue and EBITDA.
OYO Unlisted Shares: What This Update Means
For investors tracking OYO unlisted shares, the Fitch outlook revision adds another important development ahead of the company’s proposed IPO.
The key takeaway is not simply the change from Stable to Positive. Fitch’s assessment points to a combination of stronger EBITDA, improving cash generation, expected revenue growth and potential debt reduction.
However, investors should also track how much of the projected improvement translates into sustainable operating cash flows and recurring profitability, particularly given the impact of the deferred-tax credit on FY26 reported profit.
With OYO moving closer to a potential public-market listing, its financial performance, leverage trajectory and IPO execution are likely to remain key factors to watch.
To compare companies, documents, and availability explore unlisted companies on Precize. For ongoing IPO and private-market updates, browse the Precize blog. Stay updated with unlisted companies through our Precize Community. If this article was useful, you can share it with other investors through the Precize Referral Program.
FAQs
Fitch revised PRISM’s outlook from Stable to Positive because of improving EBITDA, stronger cash generation and the potential for lower leverage through continued deleveraging.
PRISM is the parent company of OYO, formerly known as Oravel Stays. It operates OYO’s hospitality and accommodation businesses across India and international markets.
OYO reported ₹9,358 crore in consolidated revenue from operations in FY26, compared with around ₹6,250 crore in FY25.
Fitch expects PRISM’s revenue to grow by around 9-14% in FY27 and FY28, following strong growth in FY26.
Yes. The proposed IPO includes a fresh issue of up to ₹6,650 crore, with a significant portion intended for debt repayment. Fitch expects this could materially reduce PRISM’s leverage if the IPO proceeds as planned.
Disclaimer: This article is for informational purposes only and should not be considered as investment advice. Investing in unlisted shares carries risks including illiquidity and potential loss of capital. Please consult with a qualified financial advisor before making investment decisions. Precize is not a stock exchange and is not authorized by any capital markets regulator.