OYO's parent PRISM filed an updated DRHP with SEBI on June 30, 2026, for a ₹6,650 crore IPO structured entirely as a fresh issue — no existing investor is selling — with ₹4,987.5 crore (75% of proceeds) earmarked specifically to repay debt. The company reported ₹748 crore PAT and EBITDA of ₹2,127 crore for the nine months ending December 2025.
Let's be honest about what's actually happening here. PRISM is not going public to fund growth. It's going public to fix its balance sheet.
Out of every ₹100 raised, ₹75 goes straight to lenders. That's not a growth story — that's a recapitalisation. And as a CFO, I read that as a signal about capital structure, not business momentum.
Here's the core concept: every company funds itself with some mix of debt and equity. Debt is cheaper (interest is tax-deductible), but it creates fixed obligations that strangle you when cash flow is lumpy — exactly the problem OYO has faced for years. When debt becomes too heavy, the weighted-average cost of capital (WACC) actually rises, because lenders demand higher rates and equity investors price in distress risk. The optimal capital structure is the point where WACC is lowest.
PRISM's move — swapping expensive debt for equity via an IPO — is a textbook deleveraging play. Pay down the debt, reduce interest burden, lower financial risk, and hopefully bring WACC down. The EBITDA doubling to ₹2,127 crore gives them the profitability story to sell to investors. The debt paydown gives them the balance-sheet story to stay alive.
The tell: SoftBank, Ritesh Agarwal, Airbnb — none of them are selling a single share. When insiders don't exit at IPO, it either means they're true believers, or the valuation isn't quite where they'd like it yet. Worth watching which it is.
Module 13 in a nutshell: the cheapest capital isn't always the best capital.
📚 Learn the concept: Capital Structure & WACC
▶ Play the 90-second CFO game All daily posts