MMYT - MakeMyTrip attracts bullish rating at BofA on reasonable valuation higher margins estimate

• Bank of America upgraded MakeMyTrip ( NASDAQ: MMYT ) to Buy after having it set at Neutral.
• Analyst Sachin Salgaonkar thinks the India's online travel company is well positioned to balance revenue rebound along with margin improvement as economy reopens.
• "Apart from revenue uptake, we 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 margin moving from 1% in FY22 to 12% in FY25," he noted
• The research firm, however, added that second quarter is expected to show seasonal weakness which is likely to result in quarter-over-quarter decline in Makemytrip's revenue, and EBITDA while a key catalyst to watch out for is the festive demand around Oct and holidays during Nov/Dec.
• Salgaonkar said valuation is reasonable, citing, "MMYT is trading at FY23E P/S of 4.1X - largely in line with global peers and cheaper than Indian peer EaseMyTrip"
• BofA assigned a new price objective to MakeMyTrip ( MMYT ) of $40 based on discounted cash flow model that takes in 13-17% increase in FY23-25 EBITDA estimates. The 52-week high for MMYT is $36.28.
• Shares of MakeMyTrip ( MMYT ) gained 27% in past one-year and are up 1.5% on Tuesday to trade at $33.06.
• Read more about MakeMyTrip's latest quarterly report .

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