Moody's Ratings has revised the outlook for Prism, the parent company of Oyo, which is preparing for an Initial Public Offering (IPO), changing it from 'stable' to 'positive'. The rating agency also confirmed the corporate family rating of B2 for this travel tech unicorn.
Suveta Patodia, Assistant Vice President at Moody's Ratings, noted that the positive outlook is based on the expectation that Oyo (formerly known as Oravel Stays) will be able to sustain stronger revenue growth and free cash flow generation over the next 12–18 months. This, she said, will contribute to further debt reduction while maintaining very good liquidity.
Patodia, who is a lead analyst for Oyo at Moody's, also emphasized that the confirmation of the B2 CFR rating reflects Oyo's leading position in the budget accommodation segment in key markets, as well as the geographical diversification of its operations in India, Europe, and the US.
Rationale for Rating Changes
Moody's explained the reason for the forecast adjustment by stating that it expects Oyo's EBITDA to grow to approximately 300 billion rupees ($315 million USD) over the next 12–18 months as the company scales and adds new sales points to its platform. Furthermore, Oyo's EBITDA is expected to more than double in fiscal year 2026, reaching 263 billion rupees compared to 108 billion rupees in fiscal year 2025.
Thanks to increased revenues and stabilized working capital outflow, Oyo was able to generate positive free cash flow for the first time in several years in fiscal year 2026. Moody's forecasts that Oyo will maintain positive free cash flow for the next one to two years, with operating cash flow covering short-term expenses, including planned capital expenditures.
Oyo plans to raise about 665 billion rupees through the IPO, of which approximately 500 billion rupees will be used to repay debt. Moody's warned that if the offering proceeds as planned, it will accelerate debt reduction and strengthen the company's credit profile; however, given the uncertainty regarding the timing and execution of the IPO, the agency's base financial forecasts do not include the funds raised or the related debt repayment.
Oyo was founded in 2013 by Raish Agarwal, who currently owns 30.52 percent of the shares. The largest shareholder is SVF India Holdings (Cayman) Limited, a subsidiary of SoftBank Group Corp, holding 40.04 percent of the shares.