Decoding the “Weird” Bonus: What’s the Real Purpose?
While the specifics of OYO’s bonus issue might appear strange often described as a “reverse split” followed by a “bonus issue” or a change in face value the motivation is typically straightforward and tied directly to the upcoming IPO:
- Pricing Aesthetics: The primary reason is often to set an appealing Face Value and per-share price for the IPO. Indian markets generally prefer a share with a low face value (e.g., ₹1 or ₹10) and a listing price that is attractive to retail investors. Complex bonus structures are a clean way to achieve this desired share denomination.
- Cap Table Simplification: Large pre-IPO companies, especially those that have raised multiple rounds of funding, often have numerous classes of shares (Series A, B, C, etc.) with different rights. The bonus issue can be a mechanism to convert and consolidate these into a single, unified class of shares before the IPO, simplifying the capital structure for public investors.
- Regulatory Compliance: The move ensures that the capital structure complies with SEBI’s specific requirements for public listing, making the IPO prospectus cleaner and easier to vet.
Why This Matters for Investors
The complexity of OYO’s action highlights three critical aspects that investors both existing shareholders and those considering subscribing to the IPO must focus on:
1. Clarity of Financial Metrics
A convoluted bonus issue can momentarily obscure the “true” earnings per share (EPS) history and other per-share metrics.
- Impact: Investors must ensure that the restated financial statements accurately reflect the history of EPS, book value, and cash flow on the new, adjusted share base. Any confusion here creates a lack of trust and makes fundamental analysis difficult. Investors need assurance that the complexity is merely structural, not an attempt to distract from underlying financial realities.
2. Corporate Governance Perception
Sophisticated pre-IPO maneuvers, even if legally compliant, can raise questions about corporate governance and transparency.
- Impact: Public investors generally favor simplicity and clarity. A company that enters the market with a complex, hard-to-follow share structure may be perceived as being less transparent or unnecessarily aggressive in its financial engineering. For a company seeking a high premium, this perception can hurt sentiment.
3. Signalling the IPO Readiness
Ultimately, a bonus or split is a clear signal that the company is in the final stages of cleaning up its books and preparing for the public debut.
- Impact: It confirms the management’s commitment to the IPO timeline. For existing private market investors, this is a positive indicator of an imminent liquidity event. For public investors, it’s a cue to begin deep-dive due diligence on the prospectus, as the company is now making the final adjustments required for regulatory approval.
In conclusion, OYO’s decision, while initially confusing, is likely a strategic and necessary step to prepare a clean, investor-friendly capital base for its IPO. While such actions don’t change the fundamental valuation of the underlying business, they underscore the need for investors to pay meticulous attention to the fine print of the capital restructuring before committing capital.
Decoding OYO’s Bonus Share: It’s Not a Simple Bonus, It’s a Bet on the IPO
OYO’s latest Postal Ballot Notice has created quite a stir among shareholders.
Here’s what makes it unusual:
Every shareholder holding at least 6,000 shares will receive 1 Bonus CCPS.
If you do nothing, you’re placed in Class A, where 1 CCPS will convert into just 1 equity share a safe but minimal gain.
However, if you actively opt into Class B by submitting an Election Letter within three working days, your CCPS could convert into 1,109 shares but only if OYO appoints bankers for its IPO in FY 2025–26.
If that milestone isn’t met, those Class B CCPS convert into just 0.10 share, almost nothing. Follow the steps below carefully to ensure your Class B election is valid and submitted within the required deadline.
Step 1: Confirm Your Eligibility
You must hold at least 6,000 equity shares of Oravel Stays Limited as of the Record Date (October 24, 2025).
Shareholders holding fewer than 6,000 shares are not eligible to receive any Bonus CCPS.
Step 2: Access the Postal Ballot Notice
Download the official Postal Ballot Notice from the company’s e-voting portal or from:
OYO Postal Ballot Notice – Oravel Stays Limited
Refer to Page 30 of the PDF this contains Annexure B, titled “Election Letter for Class B Bonus CCPS.”
Step 3: Fill Out the Election Letter (Annexure B)
On Page 30, you will find the Election Letter format.
Carefully fill in:
Your name, folio number / DP ID–Client ID, and registered address.
Confirm the number of equity shares held as of the Record Date.
Tick or clearly state that you wish to “opt-in for Class B Bonus CCPS.”
Sign the letter using the same signature registered with your depository participant (for demat holders) or the company (for physical holders).
Step 4: Submit the Election Letter Within 3 Working Days
After completing and signing the Election Letter (Annexure B), send a scanned PDF copy by email to -📩 secretarial@oyorooms.com
Use the following email subject line exactly as prescribed:
“Bonus CCPS – Election Letter – [DP ID & Client ID]”
The deadline to submit your election is within 3 business days from the Notification Date mentioned in the explanatory statement of the Postal Ballot Notice.