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Oravel Stays, which operates the budget hospitality chain Oyo, has reportedly submitted its draft red herring prospectus (DRHP) to the Securities and Exchange Board of India (SEBI) using the confidential pre-filing route.

Insiders suggest the issue size may have been reduced to between $400 million and $600 million, all of which will be used to repay debt via a primary issue, reported The Economic Times, quoting sources.

YourStory could not independently verify this report.

The confidential pre-filing route allows companies greater flexibility with regard to the issue size during the initial stage. Tata Play, formerly known as Tata Sky, was the first Indian company to file a confidential DRHP with SEBI in 2022.

The pre-filing permits companies to adjust the primary issue size by up to 50% until the updated DRHP stage. The pre-filed DRHP will not be publicly available, but qualified institutional buyers may use it for limited marketing of an IPO.

In contrast to the traditional route, where IPOs must be launched within 12 months of SEBI’s approval or final observation, confidential filings allow companies to go public within 18 months of filing.

The Oyo parent’s filing is only available to the regulator at this point, as per the report.

A source close to the company told The Economic Times that global and, to some extent, Indian market volatility was the reason for choosing the confidential route.

This would give Oravel Stays greater leeway on the listing’s timing and issue size adjustment based on market conditions. The company’s founder, Ritesh Agarwal, recently stated that adjusted EBITDA for the 2024 financial year could approach Rs 800 crore, with the current balance sheet showing Rs 2,700 crore in cash.

Oyo’s financial results for H1 2022-23 indicated a positive adjusted EBITDA of Rs 63 crore, a YoY revenue increase of 24%, and a 69% increase in monthly gross booking value for its hotels.

To showcase this improvement, the company submitted an updated financial report to SEBI in November 2022, highlighting its business performance since its initial IPO application in September 2021.

Oyo’s revenue for the 2023 financial year is expected to exceed Rs 5,700 crore, a 19% increase from Rs 4,780 crore recorded in the 2022 financial year.