MakeMyTrip $MMYT
An Introduction to India's Leading OTA
MakeMyTrip: India’s Leading Online Travel Giant
Founded in 2000 by Deep Kalra, MakeMyTrip (MMYT) has grown to become India’s largest online travel agency (50%+ market share), revolutionizing how Indians book and plan their travel.
Initially focused on helping the Indian diaspora in the U.S. book flights to India, the company expanded to the domestic market in 2005, offering a comprehensive suite of services, including flights, hotels, buses, and holiday packages. In 2010, it became the first Indian online travel company to go public on NASDAQ, a milestone for the company and India’s burgeoning startup ecosystem. Trip.com has invested ~US$1.3 bn in MakeMyTrip in 3 transactions from 2016 to build a ~49% stake.
Overview of Indian OTA industry
India’s online travel agency (OTA) industry has transformed the way people plan and book travel, shifting from traditional agents to digital platforms over the past two decades. Fuelled by increasing internet penetration, rising incomes, and growing travel demand, the industry is led by players like MakeMyTrip, Yatra, EaseMyTrip, and RedBus, offering services such as flights, hotels, and holiday packages. With mobile adoption, government initiatives like Digital India, and expansion into smaller cities, the sector continues to grow despite challenges like competition and the COVID-19 impact, leveraging technology for seamless and personalized experiences.
Financials
MakeMyTrip has grown at a 6% CAGR from 2018 to 2024 (overcoming a -75% decline in 2020 due to covid). The company emerged from Covid with structurally higher margins due to a mix of higher-margin product mix, cost controls, supplier negotiations, and tech-driven efficiency. Its strong take rates, 6-7% for air tickets and 16-17% for hotels, are significantly above global industry standards. The company’s gross merchandise value (GMV) has also surged, growing at an 11.6% CAGR during this period, with air tickets accounting for over 60% of the GMV. This consistent growth highlights MakeMyTrip's resilience in a competitive market and its ability to leverage India's expanding travel sector.
MakeMyTrip's Dominance in India's OTA Market
MakeMyTrip is the undisputed leader in the Indian online travel agency (OTA) market, capturing around 50% of online travel bookings and nearly one-third of the nation’s air ticketing volume. MakeMyTrip’s FY24 Gross Booking Value (GBV) of US$7,954 million far exceeds that of other OTAs, ~8x of #2 Ixigo, underscores its dominant position in the market.
Low Online Penetration Presents Growth Opportunity
India's OTA penetration is still low compared to markets like China and Southeast Asia, providing significant growth potential. MakeMyTrip, with its strong presence in air and hotel bookings, is well-positioned to benefit from this increasing shift to online travel. As the market expands, MakeMyTrip is set to capture more share in India’s growing travel sector, making it an attractive investment opportunity.
Valuations
MakeMyTrip trades at 54.5x EV/EBITDA, substantially above the industry average of 15-17x, in part reflecting its growth profile.
Closing Thoughts
MMYT’s robust valuation makes it difficult for us to own the shares directly, but we believe that MMYT has decades of growth ahead of it and are happy to hold the exposure indirectly via TCOM’s 49% ownership. We are long TCOM (read more)
Paraphrasing Kerrisdale this is not investment advice, and “is provided to you solely for your own entertainment purposes”.