MakeMyTrip Limited's (NASDAQ:MMYT) Path To Profitability

By
Simply Wall St
Published
February 17, 2022
NasdaqGS:MMYT
Source: Shutterstock

We feel now is a pretty good time to analyse MakeMyTrip Limited's (NASDAQ:MMYT) business as it appears the company may be on the cusp of a considerable accomplishment. MakeMyTrip Limited, an online travel company, sells travel products and solutions in India, the United States, Singapore, Malaysia, Thailand, the United Arab Emirates, Peru, Colombia, and Indonesia. The US$2.9b market-cap company posted a loss in its most recent financial year of US$56m and a latest trailing-twelve-month loss of US$38m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which MakeMyTrip will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for MakeMyTrip

According to the 4 industry analysts covering MakeMyTrip, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$14m in 2023. Therefore, the company is expected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 126% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqGS:MMYT Earnings Per Share Growth February 17th 2022

We're not going to go through company-specific developments for MakeMyTrip given that this is a high-level summary, but, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 22% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on MakeMyTrip, so if you are interested in understanding the company at a deeper level, take a look at MakeMyTrip's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:

  1. Valuation: What is MakeMyTrip worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether MakeMyTrip is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on MakeMyTrip’s board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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