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On Wednesday, BofA Securities maintained a positive outlook on MakeMyTrip (NASDAQ:MMYT) stock, with analyst Sachin Salgaonkar reiterating a Buy rating and a price target of $120.00. The endorsement comes amid a period of robust activity in the travel sector, with no signs of a slowdown and an observed shift in consumer spending habits toward more travel expenditures. According to InvestingPro data, the company has demonstrated strong momentum with a remarkable 55% return over the past year and maintains a "GREAT" financial health rating, supported by strong fundamentals and impressive growth metrics.
Salgaonkar highlighted several factors supporting the optimistic stance on the online travel company. Notably, MakeMyTrip’s strategic handling of accommodations for the Kumbh event, which took place from January 13 to February 26, showcased the company’s effective aggregation of temporary inventory. MakeMyTrip was the exclusive online travel agency (OTA) platform for tent accommodations in Prayagraj during the event. This operational success is reflected in the company’s financial performance, with InvestingPro showing robust revenue growth of 28.5% in the last twelve months and an impressive gross profit margin of 54.5%. For deeper insights into MMYT’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Despite challenges in the domestic airline industry, including engine issues affecting wide-body aircraft, the analyst does not anticipate any negative impact on MakeMyTrip. The company has demonstrated resilience against airlines’ increasing push for direct booking channels, as evidenced by performance in recent quarters.
Salgaonkar also pointed out that while MakeMyTrip faces low competition, the company is not expected to reduce marketing costs, which currently stand at 4.5-5% of gross booking value (GBV). This decision aligns with MakeMyTrip’s growth-oriented strategy, leveraging a customer base where approximately 70% of transactions come from existing users. The company’s focus remains on new customer acquisition and maintaining high growth, given the low penetration in its market.
The analyst further noted MakeMyTrip’s medium-term adjusted EBIT margin goals of around 20%, though margin improvement may be gradual as investments in growth continue. Additionally, MakeMyTrip’s direct contracting hotel strategy in regions such as Southeast Asia and the Middle East is expected to yield better margins compared to third-party supply from global aggregators.
Salgaonkar concluded by acknowledging the potential for efficiency improvements and productivity gains through the adoption of artificial intelligence (AI). This technological advancement is anticipated to enhance customer experience and optimize operations, particularly in call center and back-office functions.
In other recent news, MakeMyTrip Limited reported its third-quarter fiscal 2025 earnings, revealing an earnings per share (EPS) of $0.23, which fell short of the forecasted $0.27. Despite this, the company posted strong revenue figures, surpassing expectations with $267.36 million against a predicted $259.6 million, driven by a 26.8% year-on-year increase in gross booking value. The company achieved a record adjusted operating profit of $46 million, reflecting a margin improvement to 1.76% from the previous year’s 1.6%. MakeMyTrip continues to focus on international market expansion and AI-driven innovations, with significant growth noted in its international air ticketing and hotel segments. The company also announced the acquisition of the Happe expense management platform from Incred, strengthening its corporate travel and expense management solutions. Analysts from firms like Bank of America noted the company’s robust performance despite some macroeconomic challenges. The company remains optimistic about its growth trajectory, supported by favorable macro trends and a strong repeat customer rate.
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