OYO’s parent company, Prism Hotels and Resorts, has outlined significant business and legal risks in its updated draft red herring prospectus (DRHP) ahead of its proposed initial public offering (IPO). The filing indicates the company’s growing reliance on international markets and ongoing legal challenges, including a dispute with Zostel. While the company has shown improved financial performance, it attributes much of this success to cost-cutting measures and tax-related gains rather than operational profits.
The updated DRHP reveals a notable increase in revenue from operations outside India, accounting for 83.77% of total revenue in the nine months ending December 2025, compared to 74.70% in FY23. The United States stands out as the largest contributor, representing 27.07% of revenue, surpassing India’s 16.23% contribution. Collectively, the US, the UK, and Europe contributed 72.36% of the company’s revenue.
Moreover, the prospectus highlights a prolonged legal dispute with Zostel Hospitality, originating from a failed acquisition deal announced in 2015. Although the deal fell through, an arbitral tribunal deemed the non-binding term sheet enforceable. OYO managed to overturn the arbitral award on public policy grounds, but Zostel has contested this decision, potentially impacting OYO’s shareholding or financial obligations.
The company’s financials show a positive shift from a significant net loss in FY23 to profits in FY24 and FY25. However, the DRHP underscores that the FY25 profitability was substantially influenced by a deferred tax credit, with the company reporting a pre-tax loss for the year.
