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MakeMyTrip (NASDAQ:MMYT) has entered a share repurchase agreement with Trip.com Group (NASDAQ:TCOM) to buy back a significant portion of TCOM’s Class B shareholding, according to a Citi research note published Monday. The company, currently valued at $11.07 billion, maintains a strong financial position with InvestingPro data showing more cash than debt on its balance sheet and an impressive "GREAT" financial health score.
The transaction will likely reduce Trip.com’s ownership stake in MakeMyTrip to less than 20% from over 45% currently. To fund the approximately $3 billion repurchase, MakeMyTrip will issue new equity worth $1.4 billion (with a $200 million upsize option) and convertible debt of $1.25 billion (with a $200 million upsize option), while potentially using up to $200 million from its cash reserves. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value, though the company maintains strong fundamentals with a 55.6% gross profit margin.
Citi views this transaction as "a step forward on a potential India IPO," noting that MakeMyTrip’s management has previously indicated an India listing remains an option but wasn’t immediately planned. The firm maintained its Buy rating and $125 price target on MakeMyTrip stock.
The repurchase specifically targets Class B shares from Trip.com, which Citi analyst Vijit Jain points out means "there is no dilution in MMYT as a result of this transaction." The structure suggests strategic positioning rather than capital raising for operations.
MakeMyTrip, India’s leading online travel company, continues to benefit from the country’s growing travel market and increasing digital adoption in the travel booking sector, with this transaction potentially setting the stage for its next corporate evolution. The company has demonstrated robust growth with a 25% year-over-year revenue increase and maintains healthy liquidity with a current ratio of 1.85. For deeper insights into MakeMyTrip’s financial metrics and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports.
In other recent news, MakeMyTrip reported a strong financial performance for the fourth quarter, with a 21% year-over-year increase in revenue, reaching $245.5 million. The company’s adjusted earnings per share surpassed analyst expectations at $0.42. Gross bookings, an important measure in the travel industry, rose by 25.2% to $2.55 billion. Air ticketing revenue increased by 11.9% to $61.6 million, while hotels and packages revenue grew by 16.9% to $123.3 million. Bus ticketing revenue experienced a significant jump of 40.8%, reaching $33.5 million. For the fiscal year 2025, MakeMyTrip’s total revenue climbed 25% to $978.3 million, with an adjusted net profit of $178.2 million. Goldman Sachs recently raised its price target for MakeMyTrip to $126, maintaining a Buy rating, citing the company’s strong growth and favorable market conditions. The firm noted that MakeMyTrip’s strategic focus on volume growth and capital allocation supports its optimistic outlook.
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