Mumbai, June 30 (IANS) OYO-parent Prism Hotels and Resorts has highlighted significant business and legal risks in its updated draft red herring prospectus (DRHP), offering investors a closer look at challenges that extend beyond its improving financial performance ahead of its proposed initial public offering (IPO).

The filing showed the hospitality company has become increasingly dependent on overseas markets, remains exposed to a long-running legal dispute with Zostel and attributes much of its recent turnaround to cost reductions and tax-related gains rather than operating profitability.

The updated DRHP showed that revenue from operations outside India has risen sharply, accounting for 83.77per cent of total revenue during the nine months ended December 2025, compared with 74.70 per cent in FY23.

The United States alone contributed 27.07 per cent of revenue in the latest period, exceeding India’s contribution of 16.23 per cent. Together, the US, the UK and Europe generated 72.36 per cent of the company’s revenue.

The prospectus also draws attention to the long-running legal dispute with Zostel Hospitality, stemming from a proposed acquisition announced in 2015 that was never completed.

Although the transaction did not close, an arbitral tribunal ruled that the non-binding term sheet signed by both parties was enforceable. OYO later succeeded in getting the arbitral award set aside by the Delhi High Court on public policy grounds, but Zostel has challenged that order before a division bench under Section 37 of the Arbitration and Conciliation Act.

The company warned that if Zostel ultimately secures a final, non-appealable order in its favour, OYO could be required to issue or transfer up to 7 per cent of its shareholding, or alternatively pay an equivalent amount in cash, to Zostel and other parties.

While OYO reported a turnaround from a restated net loss of Rs 12,865.18 million in FY23 to profits in FY24 and FY25, the DRHP notes that its FY25 profitability was significantly aided by a deferred tax credit. Before accounting for this tax benefit, the company recorded a loss before tax during the year.

–IANS

pk