Macquarie reiterates MakeMyTrip stock rating on fuel costs By Investing.com

Jet fuel spot prices have spiked roughly 80% versus December-quarter averages amid the Iran conflict, prompting a sell-off in airline/cruise names and putting pressure on travel-related stocks. MakeMyTrip (MMYT) has fallen 47% over six months and trades 54% below its 52-week high; Macquarie removed MMYT from its Asia Marquee list after a 25% drop since Dec 8, 2025 while reiterating Outperform with a $90 PT. Analysts adjusted targets but largely kept positive ratings (Goldman Sachs $117 PT/Conviction Buy, JPMorgan $110 PT/Overweight, Morgan Stanley $118 PT/Overweight) even as MMYT reported Q3 FY26 revenue +20% YoY, highlighting sector headwinds from surging jet fuel and air supply constraints.

Analysis

Travel names with concentrated regional flows are behaving like quasi-sovereign risk proxies: when a geopolitical flashpoint moves, their equity repricing is amplified by simultaneous revenue, margin and working-capacity shocks. Expect booking patterns to reallocate toward shorter-duration, domestic trips and refundable inventory — that shifts margin capture away from high-commission packaged bookings and compresses OTA take-rates for at least one quarter after normalization. Airlines and OTAs will also show asymmetric cash-flow stress: carriers can pull capacity quickly (raising yields) but OTAs absorb cancellations and payment timing friction, which magnifies short-term P&L volatility even if long-term unit economics remain intact. Finally, analyst conviction can create a multi-week technical support band; if macro headlines stabilize, a relief rally of 20–35% can occur within 4–8 weeks, but absent de-escalation the downside is structural because customer mix and supplier dynamics (capacity, bilateral inventory) have changed.

Key Decisions for Investors

• Short MMYT via a 3-month put spread: buy 1.5x 30% OTM puts / sell 1x 15% OTM puts (net debit). Time horizon 6–12 weeks; target 2.5x+ payoff if travel mix deterioration persists. Max loss = premium paid; objective take-profit at 50% of max loss reduction to lock gains if headline-driven gap opens.
• Pair trade: short MMYT outright (10% portfolio short notional) and allocate equal notional long SMCI (semiconductor hardware exposure) for 3–6 months. Rationale: replace cyclic leisure exposure with secular data-center/compute demand; target asymmetric return of +25% on long if risk-off rotation reverses while short captures 30–40% downside if mix shift continues. Use 8% stop on SMCI leg to limit tech drawdown.
• Event contingent long MMYT call spread as a hedge: buy 3-month near-the-money call / sell 2x out-of-the-money call (ratio spread) sized at 25–33% of exposure if credible ceasefire talk emerges. This preserves downside protection while capturing 20–30% upside from a rapid normalization of flows within 4–8 weeks.
• Tactical trade on banks: buy GS or MS 1–3 month outperformance vs JPM (pair trade long GS/MS, short JPM) sized modestly to capture spread compression when travel-related market volatility settles. Target 8–12% capture in 1–3 months; cut if bank credit spreads widen >25bps indicating broader risk-off.