Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy Monday, folks! Hope life is good. Shubh Navratri to those who celebrate.

Today we’re diving into -
- OYO’s roadmap to hunt for private capital,
- Disney Hotstar’s first win in a long time,
- And, Adani’s latest plans to bump their ports power.

Our read time today is 4 minutes and 52 seconds - faster than Rohit Sharma dissected Pakistan’s pace attack. 🔥

Let's dive in. 👇

Market Vibe Check

Long IPO wait forces OYO to make a private capital pit-stop. 🛌

TLDR -
- OYO's raising $250m from private investors to extend their lifespan until IPO.
- Valuation is gonna be anywhere from $4-6bn, which is a pretty hefty markdown.
- Most of this money is gonna go to interest payments, which total $80m+ a year!

In September 2021, OYO filed to go public on the markets.

2 years later, nothing has happened since.

OYO has been holding off IPO plans because of how harsh public investors have been on loss-making, hyper-growth businesses - but you need someone to subsidize all the cash burn.

So they’re making a private capital pit stop and refueling the OYO rocket with a round of ~$250mn.

3 things to know -

1/ Most of this money is gonna go toward debt repayment.

In 2021, when interest rates were close to 0, lots of companies took out very cheap loans.

OYO was one of them.

They borrowed over $660 million and then some more.

But rates have been drifting upward since then, which means that OYO’s interest payments are now higher.

They owe ~$80m/year as interest alone!

Bottom line - this will WIPE OUT any profits/FCF that OYO generates.

2/ OYO has had a bit of a “rebound” season.

As far as comeback stories go, OYO is in the process of writing it’s own.

In 2020, they earned over 13,100 Cr ($1.6bn+).

That same number last year was a relatively puny 5,400 Cr ($650m).

But here’s the really bright side - over the same time period, they’ve brought losses down from 13,400 Cr → to just under 1,300 Cr.

3/ Valuation seems to be “baad ki baat!” 😮‍💨

Another great thing - OYO is not optimizing for valuation.

They’re hunting for growth capital at a (relatively) decent multiple of 6X.

This is higher than the 3.5X multiple that SoftBank internally marked their OYO investment at.

Either Aggarwal saab can’t find any takers at a higher price, or he’s super intent on getting this deal done quickly.

Solid hai… 🏨

India-Pakistan helps Disney bounce back (for now!). 🏏

TLDR -
- Disney broke a streaming record with 35m viewers for the India-Pak game.
- They’ve been trying to exit their India business for a LONG while now.
- The average North American Disney user makes 7X more money than the average Indian one.

Disney has been between a rock and a hard place for a long while now.

Their India business has been lagging behind it’s foreign business, it’s lost millions of users, and revenues have slowly tanked.

But they can score one win in their books - the India-Pakistan match went amazingly.

Their stream of the India-Pak game set a record of 35 million concurrent viewers, eclipsing Ambani & JioCinema’s record of 32 million IPL final viewers.

While this is good, it doesn’t bury all of Hotstar’s other problems.

In the streaming business, the single, MOST important metric is ARPU (average revenues per user).

The higher the ARPU of a customer, the more long-term dhandha they can drive.

Average Disney+ subscriber (OUT of India) generates $4.44 in monthly revenue.

Average Hotstar subscriber (IN India) generates a measly $0.59 in monthly revenue.

So all other things held constant, a Disney+ subscriber is worth 7.5X more than a Hotstar subscriber. (source)

As a big corporate like Disney, you ONLY take billion-dollar-bets on markets that make you big money - and India clearly doesn’t.

Mickey Mouse Clubhouse is gonna say bye-bye to Delhi 🙈

Adani builds a bigger, better, and stronger port. 🚢

TLDR -
- Most big cargo ships skip Indian ports because our harbors are very shallow.
- Adani just spent $3bn+ on a new port which has the depth to compete with Colombo, Dubai, China, etc.
- This is a big win for India’s maritime trade industry: last year we only did 17m TEUs vs. China’s 245m TEUs.

Big ships skip Indian ports.

Most large cargo ships don’t dock at Indian ports because their harbors are way too shallow to safely hold massive vessels.

They instead choose to go places like Dubai or Colombo, where ports are much more modern and connectivity is higher.

This is pretty odd, because India’s coastline is massive, and it’s right next to routes that account for 45% of global shipping traffic.

Adani baba inaugurated a new port yesterday to fix PRECISELY this problem - and it’s another reason why he’s India’s infra king.

His latest Vizinjham port has a depth of 24m vs. Dubai’s 15m and Colombo’s 18m.

This is great, because India is lagging very far behind when compared to it’s neighbors when it comes to maritime trade.

Last year, India only transacted 17 million 20-foot units, which is pretty small when compared to China’s 245 million 20-foot units.

Plus, this depth increase not just a short-term fix to a problem - it’s a bet on the general increase in size of container ships over time.

Adani is spending over $3 billion on making this port a truly flagship experience for anyone doing business with India.

Picture abhi baaki hai... 🌊

In other news… ☕

Rite Aid goes from a $61bn company → rock bottom bankruptcy (BBG)

Saudi MMA league hunts for a new acquisition (FT)

Woz-backed startup hunts for $25mn to digitize paper docs (TC)

Cred looks hungry for a wealth management acquisition (Inc42)

Nikhil Kamath launches a WTF Fund to back entrepreneurs below 22 (Inc42)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it. Have a mauj-masti filled day.

Lots of ❤️,

Team Cutting Chai