MakeMyTrip Ltd (MMYT): A Deep Dive into Its Potential Underperformance
Long-established in the Travel & Leisure industry, MakeMyTrip Ltd (NASDAQ:MMYT) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 3.07%, juxtaposed with a three-month change of 37.69%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of MakeMyTrip Ltd.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 7/10
Profitability rank: 2/10
Growth rank: 2/10
GF Value rank: 10/10
Momentum rank: 9/10
Based on the above method, GuruFocus assigned MakeMyTrip Ltd the GF Score of 66 out of 100, which signals poor future outperformance potential.
MakeMyTrip Ltd: A Snapshot
MakeMyTrip Ltd is an online travel company, providing online booking solutions for day-to-day travel needs. The company's operating segments include Air ticketing; Hotels and packages; Bus ticketing and Others. It generates maximum revenue from the Hotels and packages segment. The Hotels and packages segments include internet-based platforms, call-centers, and branch offices, which provide holiday packages and hotel reservations. Its Air ticketing segment includes internet-based platforms, providing the facility to book domestic and international air tickets. Geographically, it derives a majority of revenue from India and also has a presence in the United States; South East Asia; Europe, and other countries.
Profitability Breakdown
MakeMyTrip Ltd's low Profitability rank can also raise warning signals. Additionally, MakeMyTrip Ltd's Gross Margin has also declined over the past five years, as evidenced by the data: 2019: 64.32; 2020: 69.83; 2021: 86.35; 2022: 80.67; 2023: 70.06. This trend underscores the company's struggles to convert its revenue into profits.
Growth Prospects
A lack of significant growth is another area where MakeMyTrip Ltd seems to falter, as evidenced by the company's low Growth rank. Lastly, MakeMyTrip Ltd predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. It's crucial for investors to consider these factors when making investment decisions. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article first appeared on GuruFocus.
