Yes I know unlisted shares come with higher risk and lower liquidity.
I have been looking at Tata Capital and NSE. Both are good companies but their fundamentals are bad at the moment. NSE is priced higher than BSE despite being unlisted. Similarly, Tata capital is priced higher than similar listed NBFCs.
I did grab Oyo at a decent price. It has gotten a significant valuation cut at the moment.
Otis Elevator India was a good deal since it had a lower PE than its international counterpart. Usually, the Indian subsidiaries have a higher PE in the listed markets due to India being a growth market.
Also, Indian Potash was priced very nicely compared to other fertiliser stocks. However there seems to be no timeline or intent for an IPO.
There also are other brokers like unlistedzone.com and sharescart.com. I have talked to their RMs but they seem a bit unprofessional in the way they handle the transaction. It isn’t an automated website, rather a manual process. Also they seem to have their own recommendations, which is not a very good thing.
The biggest issue I have with these other brokers is the spread. They will sell you the share on the price they show on their website but buy for much lower. For Oyo, they had a 20% spread between buy and sell prices!
Precise has a 2% transaction fees (for both buy and sell, so effectively 4% if you intend to trade). However, the good part is that they don’t have a spread and have one price for buying and selling.
I got a good price. They are raised their current round at Rs. 41 per share. I bought mine for less than that while the fund raise was going on. As of today, they are going for Rs 49. ~30% gain in 2 months. But this is too short term.
On the long term side, I see a future for this company. They had IPO plans which were scrapped but eventually, they will List. They also just turned profitable in the previous FY. This is always a good sign for a start-up. The asset light budget hotel model is a perfect fit for India and I do think in the next 3-4 Years, they can grow to the size of Indian Hotels Company, with a valuation of $10 Billion (vs about $3 billion now), giving me a good 3x return on this investment.
Thank you for your explanation about choosing it. What about their debt ? Quality of their services? Most oyo customers are young generation. What about their long term vision? And their employees satisfaction with work and the culture? Will b2b style model be profitable in hotels?
Haha. I’m not an Oyo spokesperson. I can’t comment on all the questions you asked but from a company fundamentals perspective - they turned profitable. Yes they have Debt, but I don’t see this as a major problem.
Yes their customers are mostly young. This gives them a growing client base. Oyo hotels are used a lot by couples. As India further modernises and the number of couples looking for a private place increases, Oyo’s hotels would see a great increase in clients. Furthermore, Oyo has also made some plays in the high end side.
Look - Oyo isn’t Taj. They never will be. But this is where their strength lies. They can target the large (and growing) middle class of India. Things like Quality of their service becomes irrelevant in the space they operate.
Having 43,000 properties is no joke and this is because of their asset light model. By number of rooms, Oyo has become the 3rd largest hospitality chain in THE WORLD! only behind Hilton and Marriott. They are also operating some hotels in the USA and Europe. I remember seeing an OYO in New York, right next to Times Square.
Right now, Oyo is at about $2.5 Billion valuation. Its peak was $10 Billion. So yes- it is down. During the start-up craze where companies like Paytm and Byjus were leading, money was flowing around like crazy. Now that everyone has come back to their senses, the new valuation at the moment makes a lot of sense. As long as the company keeps going on its current track, I think it will eventually hit the $10 billion mark again and even cross it. I plan to exit after the company has done an IPO and not in the private equity market. I’m also fairly confident the Retail crowd and Mutual funds would love this- like Zomato once it turned profitable!
