S&P Revises Oravel Stays Outlook to Positive on IPO Prospects

S&P Global Ratings has revised its outlook on Oravel Stays Limited, the parent company of travel-tech platform OYO, from stable to positive, while affirming its ‘B’ long-term issuer credit rating. The decision reflects the company’s improving operating efficiencies and the potential for a strengthened capital structure following its planned initial public offering (IPO).

The revision comes just days after the Securities and Exchange Board of India (SEBI) issued observations for Oravel Stays’ proposed ₹6,650 crore IPO on June 2, 2026. S&P analysts indicated that a successful listing would be a pivotal event for the company, as it would lead to the conversion of significant debt-like instruments into equity, thereby reducing the firm's overall leverage.

Capital Structure Transformation

A core reason for the positive outlook is the expected impact of the IPO on the company’s balance sheet. Currently, Oravel Stays’ financial ratios are heavily influenced by Compulsorily Convertible Preference Shares (CCPS) and Compulsorily Convertible Cumulative Preference Shares (CCCPS). S&P currently treats these instruments as debt-like due to their lack of permanence.

As of March 31, 2025, these instruments totaled approximately ₹190 billion, accounting for nearly two-thirds of Oravel Stays’ adjusted debt. Upon a successful IPO, these will convert to equity, which S&P projects could cause the company’s debt-to-EBITDA ratio to fall below 3.5x from fiscal year 2027, compared to a base-case assumption of roughly 9.5x under the current structure.

Improving Earnings Momentum

Beyond the potential IPO impact, S&P noted that Oravel Stays is building on a track record of positive EBITDA and cash flow. The company has focused on scaling its operations and increasing operating efficiencies, which the ratings agency expects will continue to support earnings momentum over the next 12 months.

"The positive outlook reflects our expectation that Oravel’s credit metrics will improve significantly over the next 12 months if the company maintains its good earnings momentum and improves its capital structure through an IPO," S&P Global Ratings stated in its official release on June 10, 2026.

Official Sources

The rating action was formally announced by S&P Global Ratings on June 10, 2026. The agency’s assessment follows recent regulatory filings, including SEBI’s observations regarding the company’s draft red herring prospectus.

"According to officials at S&P Global Ratings, the agency’s view is predicated on Oravel Stays making steady progress toward a public offering and the subsequent deleveraging of its balance sheet," as summarized in the agency's June report.

Why It Matters

The revision to a positive outlook is a significant milestone for Oravel Stays, signaling to potential investors that the company is on a path toward financial stabilization. For the travel-tech sector, this movement underscores the importance of the upcoming IPO as a benchmark for valuation and capital structure reform. If Oravel Stays successfully executes its public offering, it could set a precedent for how large Indian tech-startups manage complex debt instruments, potentially paving the way for further upgrades in their credit profiles.

Key Facts at a Glance

• Credit Rating: Affirmed at ‘B’ (Long-term issuer credit rating).

• Outlook: Revised to "Positive" from "Stable."

• IPO Status: SEBI issued observations for a ₹6,650 crore IPO on June 2, 2026.

• Debt Impact: Conversion of CCPS and CCCPS to equity is expected to materially lower the company’s debt-to-EBITDA ratio.

• Timeline: Credit metrics are projected to improve significantly over the next 12 months.

FAQ

What does a "Positive" outlook signify?

It indicates that S&P Global Ratings may raise the company's credit rating over the next 12 to 24 months if certain conditions, such as a successful IPO or further deleveraging, are met.

Why are CCPS and CCCPS treated as debt?

Because these instruments lack permanence, S&P adds them to the company’s adjusted debt figures. Their conversion to equity during an IPO would remove this burden.

Has Oravel Stays' operating performance improved?

Yes, S&P noted that the company has established a record of positive EBITDA and cash flow through better operating efficiencies and scale.

Does the rating apply to all of Oravel Stays' debt?

The ‘B’ rating applies to the long-term issuer credit rating and the senior secured term loan.

Source: S&P Global Ratings (June 10, 2026), SEBI IPO Observations, NiftyTrader IPO Pipeline