ICICI Securities initiates MakeMyTrip stock coverage with buy rating By Investing.com

ICICI Securities initiated coverage on MakeMyTrip with a Buy and a $74 price target, implying roughly 71% upside from $43.15. The note highlights multiple FY26 headwinds, including conflict-related disruption, weaker air-travel demand, flight delays/cancellations from stricter duty-time norms, and rupee depreciation that is expected to persist into 1H FY27. Recent Q4 results were mixed: EPS of $0.32 beat the $0.28 consensus by 14.29%, but revenue missed at $250.12 million versus $280.95 million expected.

Analysis

The key setup is not the headline downgrade/upgrade cycle, but the widening gap between operational resilience and reported growth. MMYT is behaving like a classic FX- and event-sensitive platform: underlying travel demand may be intact, yet near-term estimate risk stays elevated because currency translation and episodic air-travel disruptions can suppress reported revenue for multiple quarters even when booking activity stabilizes. That makes the stock vulnerable to repeated “beat EPS / miss revenue” reactions, which usually cap multiple re-rating until visibility improves.

Second-order winners are domestic competitors and adjacent travel suppliers with more local currency exposure or less reliance on international mix. If rupee weakness persists into the first half of FY27, the relative P&L advantage shifts toward businesses with higher India-only take rates and lower USD-linked cost structures, while MMYT’s margin quality becomes less useful to the market because the street tends to pay for top-line durability first in travel platforms. The AI-related valuation compression is also doing real work here: even a fundamentally solid gross margin profile can fail to protect the multiple if investors believe traffic acquisition and pricing power may be structurally pressured.

The contrarian angle is that this may be an over-penalized setup if the market is extrapolating a temporary shock stack into a permanent demand impairment. If disruption frequency normalizes over the next 1-2 quarters, MMYT has enough operating leverage for a sharp sentiment rebound: the stock has already de-rated to the point where modest revenue stabilization could drive outsized upside. The risk is that the next catalyst is another macro or geopolitically driven air-travel shock, which would keep the name in the penalty box and prolong multiple compression rather than improving fundamentals.

Key Decisions for Investors

• Buy MMYT on weakness only after confirmation of booking-growth stabilization; use a 2-4 quarter horizon and size for a 15-20% upside / 10-12% downside profile if revenue misses persist.
• Pair trade: long MMYT / short a more FX-sensitive India consumer internet basket only if INR volatility mean-reverts; otherwise prefer the reverse pair, short MMYT vs a domestically oriented OTA/consumer platform for the next 1-2 quarters.
• Use calls rather than stock for a tactical rebound trade: buy 3-6 month MMYT calls with strikes ~10-15% above spot to express mean reversion while capping downside if another travel disruption hits.
• If holding MMYT long-term, hedge first-half FY27 currency risk with an INR downside hedge or reduce exposure ahead of earnings windows where FX translation can overwhelm operating beats.
• Watch for a catalyst-driven re-rating trigger: a quarter with revenue beat plus no major flight disruption; that combination could unlock a fast 20%+ move as shorts cover and valuation compression unwinds.