BofA reiterates Buy on MakeMyTrip stock, keeps $60 target on margins

MakeMyTrip reported Q4 revenue growth of 8% YoY, with EBITDA 8% to 12% above BofA and Street expectations and margins expanding 120 bps QoQ to 16.6% on cost control. BofA reiterated a Buy rating and $60 price target, citing margin expansion and market leadership, but management warned that the West Asia conflict and macro headwinds could pressure Q1 growth. The company also missed revenue expectations in the fiscal 2026 earnings release ($250.1M vs. $280.95M consensus) despite an EPS beat of $0.32 vs. $0.28.

Analysis

The setup is a classic quality-vs-expectations mismatch: the operating model is improving, but the market is still pricing in a persistent growth scar from macro and geopolitical uncertainty. That creates a favorable asymmetry for MMYT if management can keep monetization disciplined while protecting share; the real lever is not top-line acceleration, but sustained margin conversion, which can drive EPS revisions even in a slower booking environment.

Second-order, the near-term risk is that international weakness bleeds into mix and marketing efficiency. If conflict-driven softness persists, competitors with deeper subsidy budgets may try to buy share in domestic and cross-border travel, forcing MMYT to either defend bookings with higher incentives or accept lower growth to preserve margins. That said, the company’s push into domestic is strategically important because it reduces exposure to higher-volatility cross-border demand and should improve customer retention economics if executed well.

The market may be over-penalizing a one-quarter demand wobble while underestimating how quickly earnings can re-rate once cost discipline is proven for two or three more prints. The key catalyst window is the next 1-2 quarters: if management holds marketing intensity below booking growth and domestic mix cushions the external shock, consensus likely has room to move up on FY27/FY28 more than the current price implies. Conversely, if revenue misses persist while margins stay high, the stock can remain a value trap for several months despite operational strength.

Key Decisions for Investors

• Initiate a starter long in MMYT over the next 1-2 weeks; target a 3-6 month horizon where earnings revisions can catch up to margin durability, with downside defined by a renewed demand shock in Q1.
• Buy MMYT Jan-2026 call spreads to express a re-rating from depressed sentiment with limited premium outlay; best if entered on any post-earnings pullback or macro-related weakness.
• Pair trade: long MMYT / short a higher-beta travel name with more exposed discretionary demand, to isolate execution quality from sector noise; hold through the next two quarterly prints.
• If MMYT rallies on weak volume before guidance clarity improves, sell into strength and wait for the next evidence point — the setup is better on confirmation than on headline optimism.