Nomura Securities Upgrades MakeMyTrip (MMYT) to Neutral

Nomura Securities upgraded MakeMyTrip (NASDAQ: MMYT) from Reduce to Neutral with a price target of $14.00 (from $14.50).

Analyst Ashwin Mehta commented, "MMYT's transaction market share gain strategy has been successful, with the company growing standalone hotel transactions by 500%+ (vs 325-375% y-y guidance) and gaining share of 4pp to 29% in online hotel booking in India (Source: MB). But the market share gain is coming at a very high cost, with adjusted EPS losses likely expanding to ~USD2.37 (vs USD1.07 earlier) in FY17F and ~USD1.49 (vs USD0.36 earlier) in FY18F, and profitability unlikely even in FY19F. Given high aggression and competitive intensity, we see cash burn of ~USD200mn over the next 2 years, leading to a possibility of the firm having to raise at least USD50mn in cash by FY18F, despite the recent infusion of USD180mn in convertible debt by Ctrip (CTRP US, Buy; covered by Jialong Shi), the largest OTA (online travel agency) in China. With deeppocketed competition from Goibibo (owned by Naspers) and Oyo (backed by Softbank), we believe high competitive intensity could likely continue for the next 1.5-2 years, hence we retain our cautious stance, but upgrade to Neutral given that the stock has corrected by 18%+ in the last three months."

For an analyst ratings summary and ratings history on MakeMyTrip click here. For more ratings news on MakeMyTrip click here.

Shares of MakeMyTrip closed at $14.49 yesterday.

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