MakeMyTrip: A Beacon of Resilience in Turbulent Markets—Why Now is the Time to Buy Before Earnings

In a market riddled with volatility, MakeMyTrip (MMYT) has emerged as an outlier. While broader indices like the S&P 500 and NASDAQ faltered in early 2025, MMYT's stock defied the trend, showcasing resilience that hints at a compelling investment opportunity. With earnings growth outpacing expectations and a catalyst on the horizon, investors may want to position themselves strategically—even amid its premium valuation.

Resilience in the Storm: Outperforming During Downturns

The data paints a clear picture. In Q1 2025, MMYT's shares rose 6.75% month-on-month, far outpacing the S&P 500's -0.84% decline and the NASDAQ's +0.55% gain. Even in Q2—a period of broader market weakness—the stock's -3.63% monthly decline was far milder than the Computer and Technology sector's -9.93% drop and the S&P's -6.57% loss.

This relative strength isn't accidental. MMYT's business model, anchored in India's booming travel sector, has proven resistant to macroeconomic headwinds. While the Hospitality industry's Zacks Rank languishes at 210/250 (bottom 16%), MMYT's ability to drive +21.34% YoY revenue growth to $246.18 million in Q3 fiscal 2025 underscores its operational agility.

Earnings Catalyst: Growth Beats and a Bullish Momentum

The earnings report for Q3 fiscal 2025 was a standout: EPS of $0.41 marked a +7.89% YoY jump, while revenue surged past expectations. Even as analyst EPS estimates dipped 1.13% month-on-month, the stock's performance suggests investors are looking past near-term noise to the +28.7% annual revenue growth rate, outpacing the industry's +19.5%.

This momentum isn't fleeting. With India's travel market poised for recovery post-pandemic and MMYT's dominant market share, the company is well-positioned to capitalize on pent-up demand. The upcoming earnings release—scheduled for early Q3—could further catalyze gains if it aligns with or exceeds the revised estimates.

Valuation Dynamics: A Premium Price for a Premium Play

Critics will point to MMYT's 50.9x forward P/E, a 154% premium to its industry's 19.86x average, and a PEG ratio of 7.88x—408% above the industry norm. These metrics raise valid concerns about overvaluation. However, they also reflect the market's bullish bet on MMYT's growth trajectory.

While the Zacks #4 (Sell) rating highlights short-term risks, the rating hasn't deterred long-term investors. A +28.7% revenue growth rate and a 7.9% ROE—though low—signal a company reinvesting in scalability rather than short-term profits. If margins stabilize or expand, the P/E multiple could compress, unlocking value.

The Risks: Valuation and Margin Pressures

No investment is without risk. MMYT's margins dipped to 9.7% in the latest quarter, down from 27.7% the prior year, pointing to rising customer acquisition costs and competitive pressures. Additionally, frequent EPS estimate revisions—such as a 10% drop in Q3 2024 forecasts—highlight volatility.

Yet, these challenges are sector-wide. The Hospitality industry's broader underperformance suggests MMYT's outperformance is a testament to its execution, not just luck. If it can sustain its growth rate, even modest margin improvements could justify the premium.

Why Buy Now?

The calculus is clear: MMYT's stock has already weathered market turbulence better than its peers. With earnings growth defying expectations and a catalyst looming, the stock presents a high-risk, high-reward opportunity. For investors with a 3–5 year horizon, the premium valuation may be worth paying for access to India's travel boom.

The key is timing. Buying ahead of the next earnings report—with the stock trading at $105.25—could offer entry into a company that's not just surviving but thriving in tough conditions.

Final Takeaway

MakeMyTrip's resilience in Q1-Q2 2025 underscores its potential as a growth leader in a struggling sector. While valuation risks are real, the stock's performance during downturns and its earnings trajectory suggest it's primed for a breakout. For investors ready to take on the risk, now is the moment to position for gains—before the market fully prices in its potential.

Disclosure: This analysis is for informational purposes only. Investors should conduct their own due diligence and consult a financial advisor before making decisions.