The budget hotel segment has been witnessing intense competition over the last three years primarily due to the presence of deep-pocketed OYO. Amidst heightened competition from the SoftBank-backed firm, Treebo and Fab Hotels have been chasing sustainable growth. This reflects in Treebo’s financial performance during FY19 when its revenue grew at a fast pace and losses only slightly.
Treebo recorded almost 64% spike in operating revenue to Rs 67.8 crore in FY19 from Rs 41.35 crore in FY18. It also generated Rs 9.5 crore from the gain on sale of current investments, lease rental income, among others.
During FY19, Treebo spent Rs 193.6 crore in total while the company’s hotel operating costs increased by 7.2 times amounting to Rs 6.29 crore from Rs 87.27 lakh in the previous fiscal. Expenditure on employees benefit expenses stood at Rs 66.86 crore during FY19.
Unlike revenue, losses have seen a marginal growth of 2.86% in FY19 as compared to the preceding fiscal. Its net losses stood at Rs 118.3 crore at the end of the FY19. Importantly, Treebo’s outstanding losses for the year amounts to Rs 332 crore with intangible and PPE being reduced to Rs 40 lakh and Rs 5.37 crore respectively.
Treebo’s latest funding from BCCL, shareholding and valuation
According to a separate regulatory filing, Treebo is set to raise Rs 3.25 crore from media conglomerate Bennett Coleman & Co. Limited (BCCL). The company would be allotting one equity share and five share warrants while the board has also approved the private placement offer. The equity share will be valued at Rs 1,55,741 each while share warrants will have a value of Rs 65 lakh.
Following the investment from BCCL, Matrix and SAIF Partners will remain the biggest shareholders, each holding 18.994% of the equity while founders Siddharth Gupta and Rahul Chaudhary will hold 13.35% equity each. BCCL holds 5.586% shareholding in the company (refer pie chart for shareholding pattern).
Entrackr’s back-of-the-envelope calculation outlines that Treebo’s market capitalization valuation stood at Rs 580.2 crore or $81.71 million.
Looking at the financial performance of Treebo in FY19, one could sense the emphasis on chasing sustainable growth. In the ongoing fiscal, unit economics is expected to improve further. The company had laid off 120 employees in 2019 to weed out inefficiency and over-hiring. Entrackr had exclusively reported the development in July.
Treebo was also reportedly in advanced talks with a French hotel brand Accor SA for an up to $40 million investment. But it is yet to close this round.