Fitch Ratings has revised the outlook on Oyo’s parent company, now named Prism, to positive from stable, citing the potential for lower leverage as earnings grow and management maintains a more conservative capital structure.
Fitch Ratings has changed the outlook on Prism, the parent company of hospitality platform Oyo, to positive from stable while affirming the company’s existing long-term foreign- and local-currency issuer default ratings.
The rating agency said the revision reflects its expectation that Oyo’s improving EBITDA (earnings before interest, taxes, depreciation and amortisation) could help reduce leverage over time.
The company’s parent entity, previously known as Oravel Stays, has been renamed Prism.
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Add INDYASTORY on GoogleFitch maintains Oyo’s debt rating
Alongside the outlook revision, Fitch affirmed the rating on the $830 million senior secured term loan issued by Oravel Stays Singapore Pte Limited, a wholly owned subsidiary of the group.
The loan remains rated ‘B’, with a Recovery Rating of ‘RR4’.
The debt is unconditionally and irrevocably guaranteed by Oyo and certain other companies within the group.
Fitch said its positive outlook is based on expectations of EBITDA growth and management’s stated focus on maintaining a more conservative capital structure.
Revenue growth expected to continue
Fitch expects Oyo’s revenue to increase by approximately 9% to 14% in FY27 and FY28, following reported growth of around 50% in FY26.
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Add INDYASTORY on GoogleThe rating agency sees further opportunities for the business in fragmented hotel markets.
According to Fitch, unorganised hotels continue to account for a substantial share of available rooms in developing markets and Europe, providing Oyo with a large potential addressable market.
The company has also been expanding its premium offerings, which Fitch said can generate higher gross booking value per storefront.
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Add INDYASTORY on GoogleTechnology platform supports operating scale
Fitch expects Oyo’s EBITDA margin and operating scale to improve as the company grows.
The agency highlighted the scalability of Oyo’s technology platform and what it described as the company’s competitive cost base in India as factors supporting its operating model.
Growth in more mature markets, combined with greater emphasis on profitability, could also strengthen the company’s financial resilience.
Fitch said management’s focus on asset-light expansion and reducing leverage could contribute to greater stability in the business.
Prism reports sharp rise in annual profit
Prism reported a significant increase in profitability for the 2025-26 financial year.
According to the company’s annual report, net profit rose more than fourfold to approximately ₹994 crore.
The reported profit included a ₹678 crore deferred-tax credit, which is an important factor when assessing the underlying improvement in profitability.
Consolidated revenue from operations increased by 49.7% to ₹9,358 crore, while EBITDA more than doubled to approximately ₹2,594 crore during the financial year.
The improvement in EBITDA is particularly relevant to Fitch’s assessment because stronger operating earnings can reduce leverage when debt remains stable or declines.
Potential IPO could accelerate debt reduction
Fitch’s current rating case does not include proceeds that could potentially be generated from an IPO.
If completed, the proposed IPO could accelerate the company’s debt reduction plans.
Prism’s updated draft red herring prospectus filed with the Securities and Exchange Board of India (Sebi) in June states that the company is seeking to raise up to ₹6,650 crore through a fresh issue of equity shares.
A significant portion of the proposed proceeds is intended to be used to reduce outstanding debt.
The company plans to use up to approximately ₹4,990 crore to prepay its Term Loan B, according to the information cited in the rating assessment.
What debt repayment could mean for leverage
Fitch estimates that such a prepayment could bring Oyo’s gross EBITDA leverage below 2.0 times and net EBITDA leverage below 1.0 times.
However, the rating agency does not expect the company to necessarily maintain those leverage levels for an extended period.
Fitch said Oyo could potentially use the additional financial headroom created by lower debt to pursue inorganic growth opportunities or increase shareholder returns.
That means an eventual improvement in leverage would not necessarily translate into permanently lower debt if the company chooses to deploy additional capacity for acquisitions, expansion or distributions.
Why Fitch’s positive outlook matters
A positive outlook indicates that Fitch sees potential for an improvement in the company’s credit profile if the expected financial developments materialise.
The agency’s assessment is linked to several factors, including:
- Continued EBITDA growth
- Improvement in operating margins
- Revenue expansion
- Greater profitability
- Management’s approach to capital structure
- Potential reduction in debt
- Continued asset-light growth
The potential IPO proceeds could provide an additional source of debt reduction, although Fitch has excluded those proceeds from its current rating case.
Oyo’s next phase of growth
The latest rating assessment comes as Oyo continues to balance growth with profitability and debt reduction.
Its asset-light operating model allows the company to expand its hotel network without owning most of the underlying properties. At the same time, the expansion of premium accommodation products provides another avenue for increasing the value generated from its existing network.
For lenders and investors, the key variables will be whether Oyo can sustain EBITDA growth, manage leverage while continuing to invest and execute its proposed capital-allocation strategy.
Fitch’s positive outlook reflects the possibility of improving credit metrics rather than a completed deleveraging process. The company’s future leverage will also depend on how it deploys any additional financial capacity.
Key numbers at a glance
| Metric | Figure |
|---|---|
| Fitch outlook | Positive |
| Previous outlook | Stable |
| Senior secured term loan | $830 million |
| Loan rating | B |
| Recovery Rating | RR4 |
| FY26 revenue growth | 49.7% |
| FY26 consolidated revenue | ₹9,358 crore |
| FY26 EBITDA | ₹2,594 crore |
| FY26 reported net profit | ₹994 crore |
| Deferred-tax credit included in profit | ₹678 crore |
| Proposed fresh IPO issue | Up to ₹6,650 crore |
| Proposed Term Loan B prepayment | Up to ₹4,990 crore |
| Expected gross leverage after prepayment | Below 2.0x |
| Expected net leverage after prepayment | Below 1.0x |
What to watch next
The next important developments for Prism will include the company’s operating performance, progress on its proposed IPO, debt repayment and the sustainability of EBITDA growth.
Fitch’s positive outlook is based on the expectation that these factors can strengthen the company’s credit metrics. Any material change in revenue growth, profitability, capital allocation or leverage could affect the future rating assessment.
