On Friday, JPMorgan maintained an Overweight rating on MakeMyTrip (NASDAQ:MMYT), with a steady price target of $120.00. The firm's positive stance is based on insights from a recent fireside chat with MakeMyTrip's CFO, Mohit Kabra, which highlighted the company's robust growth strategy and market performance.
The company's stock has demonstrated remarkable strength, with a 142.89% return year-to-date and is currently trading near its 52-week high of $114.92. According to InvestingPro analysis, MMYT appears to be trading above its Fair Value, suggesting investors should carefully consider entry points.
During the discussion, several key points were emphasized, including MakeMyTrip's aim to grow three times faster than the market rate, with the market expanding at 8% and MakeMyTrip at 25%. This ambitious target appears achievable given the company's current revenue growth of 28.95% and impressive gross profit margin of 53.95%. Additionally, travel growth has been notably resilient, outpacing a broader consumer slowdown, as customers show a willingness to spend more on enhanced experiences.
The company's growth is also being fueled by its international segment, which has benefited from flexible payment options like EMI and pay-later services, especially important due to the higher costs associated with international travel. With a strong current ratio of 2.82 and more cash than debt on its balance sheet, MakeMyTrip has the financial flexibility to expand its services. The company has successfully broadened its focus beyond the consumer market by making inroads into corporate travel and servicing small travel agents.
A strategic approach to customer acquisition was also highlighted, with partnerships across multiple brand channels resulting in 30% of transactions coming from new users. MakeMyTrip's commitment to maintaining stable take rates across its services such as Air, Hotels, and Bus is part of its strategy to position itself as a mainstream volume provider, emphasizing cost-effectiveness.
Furthermore, the company's dedication to consistency in customer experience, competitive pricing, value-added services, and the convenience of being a one-stop shop for various travel needs like transport, hotels, foreign exchange, and insurance has been instrumental in driving market share gains.
For deeper insights into MMYT's financial health and growth potential, InvestingPro subscribers can access 15+ additional ProTips and a comprehensive Pro Research Report, which provides detailed analysis of the company's competitive position and future prospects. JPMorgan's analyst notes the firm's continued confidence in MakeMyTrip's business model and market strategy, endorsing a continued Overweight rating.
In other recent news, MakeMyTrip reported substantial growth in its recent quarterly results. The company revealed a 22% year-over-year top-line growth, with revenues increasing due to a 20% growth in both flights and hotels segment revenues. The second-quarter EBITDA was reported at $32.7 million, and net income was recorded at $18 million. BofA Securities and Goldman Sachs have maintained a Buy rating on MakeMyTrip, with BofA raising the price target to $119 from $112.
In addition, the company's gross bookings increased by 24.3% year-on-year, reaching a value of $2.3 billion. The adjusted operating profit also rose by 33% to $37.5 million. Analysts from Goldman Sachs anticipate a multi-year growth potential, particularly in the international travel sector, which recorded over 40% growth year-over-year.
Despite challenges such as heavy rainfall and potential geopolitical tensions, MakeMyTrip continues to show promising growth. The company maintains a strong cash position, exceeding $700 million, and has plans for share buybacks.
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