BofA cuts MakeMyTrip stock price target on higher expenses

BofA Securities cut its MakeMyTrip price target to $55 from $60 but maintained a Buy rating; the stock was reported at $41.20, down 55% over the past year and 50% year to date. The article reports revenue growth of 10.5% year over year, 2%–5% ahead of BofA and consensus estimates, while separately noting fiscal Q2 revenue of $235.16 million, 12% below a $267.41 million forecast; adjusted EPS of $0.47 met expectations. Adjusted EBIT margin fell 10 basis points year over year to 1.7%, and net income missed estimates amid higher interest expense and taxes, though BofA cited travel momentum and the company’s market leadership.

Analysis

The actionable signal is not the analyst target change; it is whether booking growth converts into durable contribution profit. Elevated marketing intensity alongside lower adjusted EBIT margin suggests growth may be bought rather than earned. If incremental bookings require sustained promotion, operating leverage—and the case for a premium platform multiple—weakens even if gross profit remains healthy. Conversely, improving hotel and bus contribution could diversify economics away from air, where pricing power may be structurally weaker.

There is a material data-quality issue: the article gives conflicting descriptions of revenue versus expectations. Verify the filed quarter and the definitions, currency treatment, and periods behind both comparisons before trading; do not treat either estimate variance as confirmed. The reported net-income pressure from interest and taxes also means operating progress may not flow through to EPS.

Near term, the large prior share-price decline may make the stock vulnerable to further estimate cuts, but it also raises the risk of a sharp rebound if forward booking and margin commentary holds. Over 1–3 months, watch the next operating update for marketing spend as a share of bookings, adjusted EBIT margin, and segment contribution. Over 6–18 months, AI and non-air expansion matter only if they lift conversion or lower acquisition costs; promotional growth without margin recovery would falsify the bull case. Treat the cited fair-value assessment and broker target as opinions, not independent evidence of undervaluation.

Key Decisions for Investors

• No immediate directional trade on this mixed and internally inconsistent report. First reconcile the revenue surprise against the company filing and the relevant consensus measure.
• Set an alert for the next update: consider a measured MMYT long only if booking growth is accompanied by stable-to-improving adjusted EBIT margin and marketing intensity is not rising; scale back or avoid if margin declines persist.
• For a bearish thesis, require confirmation from weaker forward bookings or another margin/guidance deterioration rather than shorting solely after the substantial drawdown. These operating metrics—not the broker target—are the thesis falsifiers.
• Track whether hotel and bus contribution gains translate into consolidated profitability over the next 6–18 months. If those gains are offset by persistent acquisition spending, the diversification narrative is not yet investable.