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Travel tech platform OYO, which is preparing to launch its maiden public issue, is likely to raise equity funds from institutional investors at a valuation of $3-4 billion, its Founder Ritesh Agarwal told employees on Wednesday, according to sources.

The IPO-bound firm, backed by SoftBank, had its maiden net profitable year in FY24 when it posted a profit after tax (PAT) of Rs 99.6 crore ($12 million).

The company registered a profit after tax (PAT) of Rs 100 crore in the March quarter, sources said.

It also reported an adjusted EBITDA of Rs 888 crore ($107 million) for the full fiscal year, up from Rs 274 crore ($33 million) in FY23, the sources said, citing a presentation shared in the townhall.

Oravel Stays Ltd, the operator of the travel-tech company OYO, will refile its initial public offering (IPO) documents with the Securities and Exchange Board of India (SEBI) after the refinancing of its $450 million Term Loan B (TLB) at a lower interest rate, PTI reported last week.

“OYO has also been approached by friendly investors and may do a small equity round at a $3-4 billion valuation, or at Rs 38-45 per share to further reduce its debt,” Agarwal told employees in the townhall.

In FY24, OYO added about 5,000 hotels and 6,000 homes globally.

Gross booking value (GBV) per storefront per month for hotels stood at Rs 3.32 lakh ($4,000).

The travel tech platform’s gross margins improved in FY24, reaching Rs 2,508 crore ($302 million) up from Rs 2,350 crore ($283 million) in FY23.

Operating costs also improved, decreasing from 19% of GBV in FY23 to 14% of GBV in FY24, sources said.

“This profitability was driven by improving operational performance, stable gross margins, cost efficiencies, and a reduction in interest costs following a part prepayment of $195 million in debt through a buyback process in Q3 FY24,” Agarwal said.

“For FY25, we hope to grow our revenues and GBV as well, while continuing the profit growth trajectory,” he said.

OYO had recently concluded a debt buyback of $195 million (Rs 1,620 crore). The buyback process involved the repurchase of 30% of its outstanding Term Loan B due June 2026.