Trading in shares of Oyo in private market goes up after SoftBank's valuation downgrade

6 Oct 2022 , 03:08 PM

According to reports, SoftBank, has lowered its valuation of Oyo, in its own accounts. Softbank has reportedly reduced the valuation of Oyo by around 20%. SoftBank is the biggest investor in Oyo. It currently holds 46.2% stake in Oyo. After this report of downgrade in valuation, price of Oyo’s stock in the private market has come down. 

Oyo’s shares are seeing strong trading in the private market. In the week that ended on September 30th, more than 12 lakh shares of the company were traded in the private market. In the week before that,around 1.6 lakh shares of the company were traded. Report of downgrade of valuation by SoftBank clearly caused a sharp increase in trading in the shares of the company in the private market. 

Oyo’s business model was among the worst hit by Covid restrictions and lockdowns. It is now recovering from that shock. Downgrade in valuation is mainly because of lower expected cash flows from the business in the foreseeable future as it tries to recover from the blow.