On Wednesday, MakeMyTrip (NASDAQ:MMYT), an online travel company, was downgraded by Macquarie from Outperform to Neutral, though its price target was raised to $60 from the previous $50. The company is projected to see its overall gross bookings increase from $8 billion in fiscal year 2024 to $17 billion by fiscal year 2028.
MakeMyTrip is recognized as maintaining a dominant position in the market, holding a 30-40%+ market share in both air and hotel segments. As the firm's higher margin accommodation business and ancillary services become a larger part of its revenue mix, Macquarie anticipates an improvement in MakeMyTrip's EBITDA/Gross Booking (NASDAQ:BKNG) Value (GBV) margin by 100 basis points over the next three years, reaching 2%—and potentially 2.5% in a steady state.
The travel company's revenue compound annual growth rate (CAGR) is modeled at 23% over three years and 17% over ten years starting from fiscal year 2024. EBITDA growth is expected to outpace revenue, being at least 1.5 times the level of revenue increase. MakeMyTrip's financial performance is compared to that of Booking.com, which is considered the industry benchmark with a leading 5% EBITDA/GBV margin.
Despite the positive outlook on MakeMyTrip's market positioning and the favorable thematic backdrop, Macquarie's adjustment reflects a valuation discipline that suggests the current stock price already accounts for the company's growth prospects.
InvestingPro Insights
As MakeMyTrip (NASDAQ:MMYT) navigates the competitive online travel landscape, its financial health and market performance offer valuable insights. With a focus on the company's recent metrics and strategic positioning, let's delve into the InvestingPro data and tips that shed light on MakeMyTrip's investment potential.
An essential aspect to consider is the company's balance sheet strength. MakeMyTrip holds more cash than debt, which could provide a cushion against market volatility and enable strategic investments for growth. Additionally, analysts predict that the company will be profitable this year, aligning with Macquarie's projection of increased EBITDA/Gross Booking Value margin.
InvestingPro Data highlights a robust revenue growth of 36.59% over the last twelve months as of Q3 2024, reflecting the company's ability to expand its market reach effectively. The Gross Profit Margin stands at an impressive 52.88%, showcasing the firm's ability to maintain profitability amidst its expansion efforts. Furthermore, MakeMyTrip's Price to Earnings (P/E) Ratio is currently at 125.22, which, while high, is expected to decrease to 117.45 in the same period, indicating a potential alignment with near-term earnings growth.
InvestingPro Tips also reveal that MakeMyTrip is trading at a high Price / Book multiple of 6.61, which may suggest that the stock is valued richly by the market, especially when considering its assets and shareholder equity. The company's strong performance is further evidenced by a significant one-year price total return of 122.33%, underscoring investor confidence and market momentum.
For investors seeking to dive deeper into MakeMyTrip's financial landscape, InvestingPro offers additional tips, including information on the company's earnings multiples and liquidity. To explore these insights and more, visit InvestingPro's MakeMyTrip page. Plus, use the exclusive coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a total of 18 InvestingPro Tips that could further guide your investment decisions.
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