On Thursday, BofA Securities updated its outlook on MakeMyTrip (NASDAQ:MMYT), increasing the price target to $119 from $112, while maintaining a Buy rating on the shares.
The firm acknowledged the company's performance in what is typically a slower quarter, highlighting a robust year-over-year top-line growth of 22%, which surpassed expectations by 3%. The earnings before interest, taxes, depreciation, and amortization (EBITDA), as well as earnings before interest and taxes (EBIT), were reported to be largely in line with projections.
MakeMyTrip's revenue increase was attributed to a 20% growth in both flights and hotels segment revenues year-over-year. The company's second-quarter EBITDA stood at $32.7 million with a margin of 14.2%. Although net income was reported at $18 million, it was slightly below BofA Securities' estimates, primarily due to higher finance costs.
Key performance indicators (KPIs) showed that the air ticketing net revenue margin rose to 6.8% in the second quarter, up from 6.4% in the first quarter. The hotels and packages (H&P) net revenue margin remained steady quarter-over-quarter at 17.5%. Sales and marketing expenses as a percentage of gross bookings were recorded at 4.6% for the quarter.
Following the second-quarter results, BofA Securities has adjusted its fiscal year 2025/26 earnings per share (EPS) estimates upwards and revised the price objective to $119 accordingly. The firm reiterated its Buy rating on MakeMyTrip, citing the expectation of continued strong momentum in travel demand.
InvestingPro Insights
MakeMyTrip's recent performance aligns with several key metrics and insights from InvestingPro. The company's impressive revenue growth of 28.95% over the last twelve months, as reported by InvestingPro, supports BofA Securities' observation of robust top-line growth. This growth is further reflected in the strong EBITDA growth of 73.56% over the same period.
InvestingPro Tips highlight that MakeMyTrip holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations, indicating a solid financial position. This financial stability could be a factor in the company's ability to capitalize on the strong travel demand momentum mentioned in the article.
The company's high gross profit margin of 53.95%, as noted in the InvestingPro data, aligns with the steady hotels and packages net revenue margin reported in the article. This suggests MakeMyTrip is maintaining its profitability while growing its revenue.
It's worth noting that MakeMyTrip is trading at high valuation multiples across various metrics, including P/E, EBITDA, and revenue. This could be attributed to the market's positive outlook on the company's growth prospects, as reflected in BofA Securities' increased price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for MakeMyTrip, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.