OYO Moody’s Outlook (October 18): Prism Moves to Positive as Its ₹6,650 Crore IPO Waits

The OYO Moody’s outlook has turned positive. Moody’s Ratings has moved the outlook on Prism, the parent of OYO, to positive from stable and reaffirmed its B2 corporate family rating, Business Standard reported on October 18, citing PTI. The rating itself didn’t move. What changed is the direction Moody’s thinks it could go next.

Why the OYO Moody’s outlook changed

It comes down to cash. Moody’s expects OYO, formerly Oravel Stays, to keep up stronger earnings and free cash flow over the next 12 to 18 months, which should help it cut debt further while keeping liquidity very good. Lead analyst Sweta Patodia, an Assistant Vice President at Moody’s, tied the B2 affirmation to OYO’s leading position in budget stays across its key markets and its spread across India, Europe and the US.

The numbers behind that view are fairly specific. On Moody’s figures, OYO’s EBITDA more than doubled to ₹2,630 crore in FY26 from ₹1,080 crore in FY25. The agency expects it to reach about ₹3,000 crore (around $315 million) over the next 12 to 18 months as more storefronts join the platform. According to The Hindu BusinessLine’s PTI report, higher earnings and steadier working capital let OYO post positive free cash flow in FY26 for the first time after several years of burning cash. Moody’s expects that to continue for one to two years, with operating cash flow covering near-term needs, including planned capex.

The IPO is not in Moody’s numbers

This is the part we’d read twice. OYO plans to raise around ₹6,650 crore through its IPO, with roughly ₹5,000 crore earmarked to repay debt. Moody’s says a completed offering would speed up deleveraging and strengthen the credit profile. But because the timing and execution are uncertain, its base-case forecasts leave out both the IPO money and the debt repayment.

So the upgrade in outlook rests on the operating business alone. If the listing does happen and the debt is paid down, that’s upside the agency hasn’t counted yet.

Where the IPO stands

Prism filed its updated draft red herring prospectus (UDRHP-I) with SEBI at the end of June, The Economic Times reported on June 30. That followed a confidential DRHP filed in late December 2025 and SEBI’s approval in June. The issue is entirely a fresh issue of up to ₹6,650 crore with no offer for sale, and ₹4,987.5 crore of the net proceeds is set aside for repaying or prepaying borrowings. The company may also raise up to ₹1,330 crore in a pre-IPO placement, which would shrink the fresh issue by the same amount. Our explainer on how a pre-IPO placement shrinks the fresh issue walks through that mechanism.

The same ET report noted that S&P Global Ratings had also moved Prism’s outlook to positive in June, affirming its ‘B’ rating. For the nine months to December 2025, revenue from operations was ₹6,941 crore and net profit ₹748 crore, and about 84% of revenue came from outside India.

On ownership, founder Ritesh Agarwal holds 30.52%, per PTI, while SoftBank’s SVF India Holdings (Cayman) is the largest shareholder with 40.04%.

What to watch

No price band or dates have been announced. When the red herring prospectus arrives, we’d check two things: how much of the ₹6,650 crore really goes to debt after any pre-IPO round, and whether FY26’s first year of positive free cash flow holds up in the latest numbers. Our guides to fresh issue vs offer for sale and IPO investing in India cover the basics.

Disclaimer: This article is for information and education only and is not investment advice. Please do your own research or consult a SEBI-registered adviser before making any investment decision.