Just what is OYO doing?

I know, I know, you are probably fed up to your back teeth with stories on OYO. Frankly, so am I, especially as Indian media reports focus on two words—expansion and valuation—with eye-popping numbers, the company line but no explanation of the rationale. Or, if there even is one.

Our story today is a little different. Let me explain.

OYO's expansion spree started early last year with the acquisition of service apartment operator Novascotia, leading up to last month's deal to buy European short-term property rental company @Leisure.

Makes sense, you say? Fine. Then what about the acquisition of a wedding marketplace? Or starting cloud kitchens? Or, if media reports are to be believed, plans to enter senior assisted living?

And that's just over the past year, without taking into account the spread of its tentacles globally. OYO entered five new countries last year, and it has already matched that count so far in 2019.

OYO is now in 18 countries, its website claims, never once naming all of them. We trawled OYO's blog and media reports and found 14. Four countries remained as much of a mystery as OYO's valuation.

That now stands at roughly $10 billion after founder Ritesh Agarwal bought back shares to the tune of $2 billion. And reports say the SoftBank-backed company is targeting an $18 billion valuation in a planned IPO a couple of years from now.

 

“The glitter and glamour of increasing valuation has certainly crossed the real value of the product itself,” one investment banker says.

 

That begs the question—is OYO entering new countries and businesses to increase its valuation or is its valuation increasing as it enters new spheres? Is the six-year-old startup becoming a conglomerate? What on earth is its core competency?

Durga, Prajakta and Pramshu, in today's story, give us the answer—not just with words, but with data. It shows OYO's geographic spread, its (seemingly) allied businesses, ballooning valuation and deepening losses.