BofA cuts MakeMyTrip stock price target on weak travel demand

BofA cut MakeMyTrip's price target to $60 from $71, while retaining a Buy rating, citing an expected soft fiscal Q2 amid domestic airline supply constraints and elevated fuel costs. The firm forecasts 15% constant-currency revenue growth, down from the company’s roughly 20% historical pace, with air revenue expected to decline 4% year over year as higher fares suppress demand. July and August 2026 domestic air traffic fell 5% and 6%, respectively, though hotel and bus revenue are projected to grow 20% and 26% in constant currency.

Analysis

The relevant issue is not the modest topline deceleration but mix: lodging and ground transport should carry structurally better take rates and lower disruption risk than air, limiting EBITDA downside if management controls marketing spend. MMYT’s reported-dollar growth will remain optically weak while INR depreciation persists, creating a valuation-entry opportunity only if local-currency booking growth and contribution margins hold; ADR holders are effectively underwriting both Indian travel demand and FX.

Over the next 1-3 months, monthly domestic passenger traffic and airline capacity normalization are the key catalysts. A recovery in capacity would release pent-up demand and improve air transaction volumes, while sustained fuel-driven fare inflation risks pushing travelers toward rail/bus and shorter-duration stays—potentially preserving bus growth but impairing high-value flight-plus-hotel conversion. The more consequential 6-18 month question is whether MMYT can use airline disruption to increase direct hotel supply, loyalty penetration, and package attachment; that would justify a higher mix-adjusted multiple even with slower air growth.

Consensus may overreact to reported revenue translation and air-volume weakness after the stock’s large drawdown, but the prior earnings beat needs scrutiny: a profit surprise alongside a revenue miss can reflect timing, take-rate mix, or cost restraint rather than durable demand. This is not yet a clean long absent evidence that adjusted EBITDA/GBV is stable or expanding. Thesis is falsified by a second consecutive quarter of local-currency GBV deceleration, hotel growth slipping below the high teens, or incremental margin deterioration despite the favorable mix.

Key Decisions for Investors

• Keep MMYT on a 1-3 month watch list rather than chase: initiate a starter long only after results confirm constant-currency GBV growth above ~15% and stable-to-higher adjusted EBITDA margin. Upside is rerating toward the analyst target range if air capacity recovers; downside remains material if FX translation and demand softness persist.
• For existing MMYT exposure, reduce the currency component with a partial USD/INR hedge where operationally feasible; reported ADR earnings can lag underlying local-currency execution during INR weakness.
• Use Indian domestic-air traffic releases and fuel-price/fare trends as a high-frequency catalyst dashboard. Add only if traffic stabilizes sequentially and hotel-plus-bus growth remains above ~20% constant currency; cut risk if passenger declines extend into the next reporting period.
• Avoid treating BAC’s target revision as an independent trading catalyst: the actionable data are MMYT’s conversion, marketing efficiency, and margin disclosures. A revenue rebound without contribution-margin improvement would not support a durable multiple expansion.