MakeMyTrip Limited Risk-Reward Favorable – BofA
2022.08.30 21:29
MakeMyTrip Limited (MMYT) Risk-Reward Favorable – BofA
By Sam Boughedda
A BofA analyst upgraded shares of MakeMyTrip Limited (NASDAQ:MMYT) to Buy from Neutral in a note on Tuesday, raising the price target to $40 per share.
The analyst said they are upgrading the stock as they find the risk-reward favorable, and the company is likely to show revenue growth and margin improvement.
“We find the company well placed to balance revenue rebound along with margin improvement. On the ground, we are seeing pent-up demand in travel pick-up as economy reopens and users look for meaningful travel after two years,” explained the analyst. “We expect uptake to further improve as ticket prices normalize and international travel opens up.”
The analyst also stated that the last two years of Covid have led to a decline in competition as most OTAs struggled when revenues went down to near zero.
In addition, apart from revenue uptake, BofA “find MMYT well placed also to show margin improvement on the back of fixed costs going down during Covid and as operational leverage plays out.”
“We estimate FY22-25 revenue growth of 58% CAGR and see EBITDA margins moving from -1% in FY22 to 12% in FY25. We increase our FY23-25 EBITDA by 13-17% leading to DCF based PO rise to $40,” added the analyst.
