- If you are wondering whether MakeMyTrip at around US$37.88 is a bargain or just looks cheap, the key question is how its current price compares with its underlying worth.
- The stock has seen sharp moves recently, with a 3.1% decline over the last 7 days, a 32.3% decline over 30 days, and year to date returns of a 53.7% decline, although the 3 year and 5 year returns sit at 61.7% and 26.6% respectively.
- This price action comes as MakeMyTrip continues to sit in focus as a Nasdaq listed online travel player. Investors are weighing up long term demand for digital travel bookings against changing risk appetite in growth oriented names. Broader sentiment around US listed consumer services companies has also shaped how quickly investors are willing to reprice expectations.
- Right now, MakeMyTrip holds a value score of 1 out of 6. This raises useful questions about how different valuation checks, from cash flow models to multiples, compare with each other and how a more complete way of thinking about valuation comes together at the end of this article.
MakeMyTrip scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: MakeMyTrip Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today using a required rate of return.
For MakeMyTrip, the model used is a 2 Stage Free Cash Flow to Equity approach. The company’s latest twelve month free cash flow is about US$208 million. Analyst inputs and subsequent extrapolations by Simply Wall St feed into ten year projections, with free cash flow for 2035 estimated at around US$492 million.
Rolling all of these projected cash flows together, the DCF model arrives at an intrinsic value of about US$40.75 per share. Compared with the recent share price of roughly US$37.88, this implies the stock is trading at around a 7.1% discount to this estimate, which sits in the “close but slightly cheap” zone rather than a clear-cut bargain.
Result: ABOUT RIGHT
MakeMyTrip is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.
Approach 2: MakeMyTrip Price vs Earnings
For profitable companies, the P/E ratio is a useful way to think about what you are paying for each dollar of current earnings. It links directly to the bottom line, which is usually where equity investors focus first.
What counts as a "normal" P/E depends a lot on how quickly earnings are expected to grow and how risky those earnings are. Higher growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk often calls for a lower one.
MakeMyTrip currently trades on a P/E of 63.32x. That sits above the Hospitality industry average of 20.62x and also above the broader peer average of 24.87x. Simply Wall St’s Fair Ratio for MakeMyTrip is 52.19x, which reflects a preferred P/E that factors in elements such as earnings growth, profit margin, market cap, industry and company specific risks.
This Fair Ratio is more tailored than a simple comparison with peers or the industry, because it adjusts for the company’s own profile rather than assuming that all Hospitality names deserve the same multiple. With the current P/E at 63.32x versus a Fair Ratio of 52.19x, the shares screen as OVERVALUED on this metric.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your MakeMyTrip Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives are Simply Wall St’s way for you to attach a clear story to the numbers by writing out your view on MakeMyTrip, linking that story to assumptions on future revenue, earnings and margins, and then turning it into a fair value that you can compare with the current price on the Community page used by millions of investors. The narrative and its fair value update automatically as new news or earnings arrive. A very optimistic investor might lean toward the higher analyst target of US$117.0, while a more cautious investor might anchor on US$85.0. Each of these views becomes a different Narrative that helps you decide how attractive the current share price looks next to your own fair value.
Do you think there's more to the story for MakeMyTrip? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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