On Wednesday, Goldman Sachs maintained a Buy rating on MakeMyTrip (NASDAQ:MMYT), with a steady price target of $112.00. The firm highlighted MakeMyTrip's impressive second-quarter results for the fiscal year 2025, which saw a 23% year-over-year increase in revenue, slightly surpassing Goldman Sachs' projections. The company's quarterly margins remained consistent despite the typically less favorable season for travel.
MakeMyTrip's recent financial disclosures reveal that travel demand has not shown significant signs of a downturn. Particularly, international travel for the company has continued to surge, recording over 40% growth year-over-year. Goldman Sachs anticipates a multi-year growth potential in this segment. The domestic air segment of MakeMyTrip also outperformed the industry's volume growth, suggesting resilience to competitive shifts, including direct bookings through airlines.
Goldman Sachs' forecasts for MakeMyTrip remain largely unchanged, with expectations of approximately 20% annual revenue growth over the medium term.
The firm predicts over 30% compound annual growth rate (CAGR) in EBITDA for MakeMyTrip from fiscal year 2024 to 2027. Despite MakeMyTrip's trading at a price-to-earnings (P/E) ratio of 60 times the fiscal year 2026 earnings, which stands above the average for global travel companies and some Indian internet peers, Goldman Sachs sees no immediate cause for a correction in the company's multiples. This outlook is based on the strong growth prospects and the anticipation of a continued favorable competitive environment.
The valuation of MakeMyTrip on a growth-adjusted basis, with a price-to-earnings growth (PEG) ratio of 1.5 times, positions the company in the mid to lower range within Goldman Sachs' coverage. The firm's reiteration of the Buy rating and a 12-month price target of $112 underscores confidence in MakeMyTrip's sustained growth and market performance.
In other recent news, MakeMyTrip Limited reported significant growth in its fiscal 2025 second-quarter results. Despite industry challenges, the online travel company saw a 24.3% year-on-year increase in gross bookings, reaching a value of $2.3 billion. The adjusted operating profit also rose by 33% to $37.5 million. These developments were largely attributed to the company's expansion in supply and AI-driven enhancements.
International air ticketing and hotel revenues saw considerable growth, with the former rising by over 39% and the latter surging by 62% year-on-year. MakeMyTrip also expanded its hotel offerings across 165 countries and reported promising growth in the corporate travel segment and customer loyalty initiatives. Furthermore, the company launched a new loyalty program and a co-branded credit card with ICICI Bank.
While heavy rainfall impacted demand in the reported quarter, early indicators for October suggest a positive outlook for the holiday season. The company's GenAI technology deployment is expected to enhance efficiency and customer experience, with significant financial impacts anticipated in future quarters. However, geopolitical tensions could pose near-term headwinds for international travel. Despite these challenges, MakeMyTrip maintains a strong cash position, exceeding $700 million, and plans for share buybacks.
InvestingPro Insights
MakeMyTrip's strong financial performance, as highlighted by Goldman Sachs, is further supported by real-time data from InvestingPro. The company's revenue growth of 29.87% over the last twelve months aligns with Goldman Sachs' projections of sustained growth. This is complemented by an impressive gross profit margin of 53.29%, reflecting the company's ability to maintain profitability despite seasonal fluctuations.
InvestingPro Tips indicate that MakeMyTrip holds more cash than debt on its balance sheet, which could provide financial flexibility for future growth initiatives, particularly in the expanding international travel segment. The company's high return over the last year, with a one-year price total return of 170.6%, underscores investor confidence in its growth strategy.
While the P/E ratio of 51.39 is indeed high, as noted in the article, it's worth mentioning that InvestingPro calculates a PEG ratio of 0.05, suggesting that the stock might be undervalued relative to its growth prospects. This could support Goldman Sachs' view that there's no immediate cause for a correction in the company's multiples.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for MakeMyTrip, providing deeper insights into the company's financial health and market position.
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