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Citi raises MakeMyTrip target to $93, maintains 'buy' rating

Published 16-05-2024, 02:30 am
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On Wednesday, Citi maintained a Buy rating on MakeMyTrip (NASDAQ:MMYT) and increased its price target to $93 from $85. The travel company's fourth-quarter performance exceeded expectations, with gross bookings and adjusted revenue surpassing estimates by 2% and 4%, respectively. MakeMyTrip's adjusted EBIT also outperformed, coming in 11% higher than anticipated.

MakeMyTrip's advertising and promotional spend was notably restrained, accounting for only 4.6% of the gross booking value, which is a decrease from previous quarters and below Citi's forecast. This disciplined spending has been instrumental in the company's growing profitability. MakeMyTrip's diverse platforms serve both B2C and B2B customers, strengthening its position in the travel distribution market.

The firm's strategic focus on expanding its accommodation offerings is set to capitalize on the robust demand in both leisure and business travel sectors. Additionally, MakeMyTrip has seen significant growth in its ancillary travel services, with a 116% year-over-year increase, outpacing the overall growth rate of 37%.

Citi's optimistic outlook for MakeMyTrip is based on the strong travel demand and the company's continued profitability expansion. The revised price target reflects an increased valuation multiple, now set at 40 times Citi's March 2026 adjusted EBIT estimate, up from the previous multiple of 36. The new target price stands at $93, reflecting the firm's confidence in MakeMyTrip's growth trajectory.

InvestingPro Insights

According to InvestingPro data, MakeMyTrip's (NASDAQ:MMYT) market capitalization stands at a robust $9.31 billion, with a high P/E ratio of 182.39 reflecting investor confidence in its future earnings potential. The company's revenue growth is particularly impressive, showing a 36.59% increase over the last twelve months as of Q3 2024, and a quarterly growth of 25.62% in Q3 2024. This growth is underpinned by a substantial gross profit margin of 52.88%, indicating strong operational efficiency.

InvestingPro Tips highlight that MakeMyTrip holds more cash than debt on its balance sheet, which is a solid indicator of financial stability, and net income is expected to grow this year, aligning with Citi's positive outlook. Additionally, the company is trading near its 52-week high, with a price percentage of 99.71% of that peak, showcasing the market's optimism towards its stock.

For those interested in a deeper dive into MakeMyTrip's financials and performance indicators, InvestingPro offers additional insights. There are 19 more InvestingPro Tips available, which can be accessed for those looking to make an informed investment decision. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking valuable information that could be vital for potential investors.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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