Latest Developments:
MakeMyTrip (MMYT) posted strong 1Q25 results with a 21.6% YoY increase in gross bookings and a 29.9% rise in operating profit. However, despite this growth, margins deteriorated due to higher marketing expenses and procurement costs. Gross profit declined from 69.5% to 66.3%, and net income margin fell to 8.2% from 9.6%. While MMYT is expanding aggressively and diversifying internationally, margins are likely to remain volatile as the company continues its growth phase.

Investment Case:
MMYT is well-positioned to benefit from India’s strong economic growth and the expansion of its online travel market. However, its valuation is exceedingly high, with a P/E of 52.39x and EV/EBITDA of 86.94x, suggesting that much of its future growth is already priced in. Despite outperforming global peers on profitability and liquidity, MMYT’s share price reflects overly optimistic assumptions, leaving little room for errors. Any slight deterioration in growth could lead to a significant sell-off.

Company's Valuation:
My DCF analysis suggests that MMYT is priced for an annualized growth rate of 35% through FY2030, a level that may be unsustainable. With the current share price of $104.7, the company’s lofty valuation implies little margin of safety. If growth slows or fails to meet expectations, the stock could face a sharp decline.

Disclaimer: The above is an excerpt on a report written by our close associate, Selendis Research. Check out the full report here on Seeking Alpha. All information provided is intended solely for general informational purposes. Seven Insights does not take into account individual financial goals or situations and does not provide personalized investment advice. Seven Insights is not a licensed securities dealer, broker, U.S. investment adviser, or investment bank.