NASDAQ listed MakeMyTrip Inc (MMYT, Financial) is a Gurgaon based company that provides online travel services including flight tickets, domestic and international holiday packages, and hotel reservations among others. Founded by Deep Kalra in 2000, the company has a market cap of about $1.04 billion and conducts its business principally through its Indian subsidiary, MakeMyTrip Private Limited (MMT India).
The company missed the analyst consensus estimate in the third quarter of fiscal 2015. Even after a 22.9% year-over-year increase to $35.1 million, the top line (total revenue less service costs) fell short by $1.29 million while the EPS of $0.01 missed the mark by 2 cents. However, the earnings met Wall Street expectations and the estimates of analysts at Zacks Investment Research. The company would have recorded an operating profit of $1.5 million, but owing to higher employee share-based compensation, costs in the quarter ended December 31, 2014, and the amortization of acquisition related expenses, the company reported a net operating loss of $2.9 million. The company’s net finance costs also increased by $0.3 million year-over-year from $0.4 million, primarily due to higher foreign exchange losses. The loss for the quarter ended December 31, 2014 was reported at $3.7 million as compared to a loss of $1.6 million in the quarter ended December 31, 2013.
In 3Q15, the transactions for Hotels and Packages services (H&P) improved by 46.5% year over year whereas the transactions for air ticketing grew by 47.3% year over year in 3Q15. The overall Gross Bookings reflected a Y-o-Y increase of 34.7% reaching $419.2 million where the gross bookings for Hotels and packages increased by 35.1%. The MakeMyTrip app had a blockbuster quarter, with the total number of downloads at the end of December coming in at 5.5 million – a big leap from the 4.1 million at the end of September.
In the unaudited earnings transcript released on 29th Jan, 2015, the company announced an acquisition of a minority equity stake in Bengaluru based Simplotel Technologies Private Limited through the $3 million Innovation Fund which was announced in Sep 2014. Simplotel builds responsive and optimized websites as well as booking engines that will help in promotion of the online distribution of accommodation inventory in India. With no other financial information disclosed, MMYT committed to make further investment in the company in June 2015, which would bring up its total equity shareholding in the company to 25%.
The Stock Curves
MakeMyTrip Limited has a one year low of $19.06 and a high of $36.12. The stock has a 50-day moving average of $26.67 and a 200-day moving average of $27.74. With its earnings for Q3 released on the 29th January, MMYT traded up 2.24% on the next day, hitting $24.85 and giving the company a strong buying pressure with a convincing volume of 605,300 shares. Despite this surge, the company lost 7.96% overall during this week and the past 4 weeks graph shows a down drop of 8.57%. This requires the traders to be vigilant with the stock and keep a close eye on earnings estimate. Considering the trends and the fact that there are other stocks in the market that have performed better in the given macroeconomic environment, I would give this share a hold rating.