Fitch Ratings has revised the outlook on Oyo parent Oravel Stays' long-term foreign and local-currency issuer default ratings (IDRs) to 'positive' from 'stable', reflecting its view that Oyo will deleverage driven by EBITDA growth.

The parent entity of the hospitality major has been re-named to Prism from 'Oravel Stays'.

Fitch has also affirmed the rating on the $830 million senior secured term loan issued by its-fully owned subsidiary, Oravel Stays Singapore Pte Limited, at 'B' with a Recovery Rating of 'RR4'. The issuance is unconditionally and irrevocably guaranteed by Oyo and certain other subsidiaries within the group.

"The outlook revision reflects our view that Oyo will de-leverage, driven by EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) growth and management's commitment to a more conservative capital structure," Fitch Ratings said.

The ratings agency said it expects Oyo's revenue to rise by 9-14 per cent in FY27-28 after growing by 50 per cent in FY26.

"Unorganised hotels still account for most of the rooms in developing countries and Europe, and they present a big addressable market for Oyo. At the same time, Oyo has been expanding premium offerings that generate higher gross booking value per storefront.

"We also expect its EBITDA margin and scale to improve. Oyo enjoys operating benefits from the scalability of its technology platform and a competitive cost basis in India," Fitch Ratings said.

Prism reported an over four-fold rise in net profit for 2025-26 financial year to ₹994 crore. The net profit also included a ₹678 crore deferred-tax credit, the company's annual report showed. Consolidated revenue from operations increased 49.7 per cent to ₹9,358 crore and EBITDA more than doubled to ₹2,594 crore last fiscal.

"The increased profit from mature markets and management's focus on profitability, asset-light growth and reducing leverage are likely to improve the resilience and stability of the business," Fitch Ratings said.

It highlighted that the rating case does not factor in the potential proceeds from the company's IPO, which if completed will accelerate Oyo's de-leveraging as it plans to use up to ₹4,990 crore to prepay the Term Loan B.

"We expect the prepayment to reduce Oyo's EBITDA gross and net leverage to below 2.0x and 1.0x, respectively. However, we do not expect the company to operate at that leverage profile. Fitch believes Oyo is likely to use the improved rating headroom to pursue inorganic growth opportunities or raise shareholder return," Fitch Ratings said.

Prism, seeking to raise up to ₹6,650 crore through a fresh issue of equity shares, plans to deploy a major portion of its IPO proceeds towards reducing its debt burden, according to the Updated Draft Red Herring Prospectus (UDRHP) filed with Sebi in June.