MakeMyTrip's Growth Momentum To Sustain In 2024, Says BofA Securities

MakeMyTrip Ltd. is likely to continue its growth momentum in fiscal 2024 as the travel industry sees a surge in demand even after the ICC World Cup and festive season, according to BofA Global Research.

"We remain optimistic on MMYT's fundamentals, given steady revenue growth and expected margin improvement, led by benign competition and scale benefits," BofA said in a note.

The research firm maintains a 'buy' rating while raising the company's FY25/26 earnings per share estimates by 5–6% including increasing stock price to $51.

While BofA Global Research sees subdued air volumes in the third quarter, it expects the air revenue to see a rise of 20% due to better pricing. On the hotel front, the research firm sees higher average room rates, with occupancies in the range of 70%. BofA also added that the hotels seem to be balancing their yield. It also notes a slight shift in demand for premium offerings.

Data from Hotelivate Research indicates that the mix of more than Rs 7,500 per night hotels has doubled year-on-year to 23%, while Rs 2,500–5,000 still remains the sweet spot, the firm said in its note.

It also expects MakeMyTrip's hotel and bus business to remain strong, with an expected 27–32% year-on-year growth leading to a consolidated revenue of $214 million.

The key monitorable factors, according to the research firm, will be drivers of continued growth on a high base and supply issues led by high airfares. MakeMyTrip also added that it expects higher spend on marketing and brand campaigns in the third quarter; however, it expects a 190 basis points quarter-on-quarter improvement of adjusted EBIT margins and adjusted EBIT at $36.1 million.