Fitch downgrades OYO’s ratings over uncertainty in making profit

Fitch Ratings has downgraded Oravel Stays Ltd’s (OYO) Long-Term Foreign- and Local-Currency Issuer Ratings (IDRs) from “B” to ‘B-‘, citing uncertainty about the hospitality company achieving material EBITDA profit in Fy23.

“The company faces execution challenges given the lacklustre recovery in travel demand in the price-sensitive markets where OYO operates. OYO will likely achieve meaningful EBITDA profit only in the year ending March 2024 (FY24), relative to our previous expectations of FY23,” said the rating agency in a statement.

The outlook on instruments is stable. It reflects comfortable liquidity as available cash is sufficient to fund the expected Free Cash Flow (FCF) deficit in the next two years, with limited refinancing risk on its long-dated debt.