MakeMyTrip’s Premium Valuation and Earnings Potential: A Risky Bet for Long-Term Investors?

MakeMyTrip (MMYT) has long been a polarizing stock for investors, balancing robust earnings growth with a valuation that appears stretched relative to its peers. As of August 2025, the company trades at a forward P/E ratio of 47.76 [1], though other estimates push this metric as high as 95.6x [2], far exceeding the industry average of 22.4x [2]. This premium valuation raises critical questions: Is the market overpaying for MakeMyTrip’s future earnings potential, or is the stock fairly priced for a company demonstrating strong operational momentum?

Valuation Metrics: A Tale of Two Narratives

The forward P/E ratio, a key metric for assessing future expectations, reveals a fragmented picture. While some sources cite a forward P/E of 47.76 [1], others report 71.70 [3] or even 95.6x [2], reflecting differing methodologies and timeframes. The disparity underscores uncertainty in earnings forecasts. For context, MakeMyTrip’s trailing P/E of 95.6x [2] dwarfs the peer average of 22.4x [2], suggesting investors are paying a significant premium for growth. However, the company’s Q1 2025 results—7.8% revenue growth to $268.8 million and a 22.6% profit increase to $25.8 million [4]—justify some optimism.

The challenge lies in reconciling these earnings with the stock’s price. At a market cap of $9.73 billion [4], MakeMyTrip’s enterprise value to revenue (10.19x) and enterprise value to EBITDA (67.08x) [2] also appear inflated. Analysts project a fair value of $120.11 [2], implying a 19% upside, but this assumes continued earnings growth outpacing the industry.

Earnings Estimates and Zacks Rank: A Mixed Signal

Consensus estimates for 2025 project earnings of $1.97 per share and revenue of $1.16 billion [3], with the next quarterly report expected to show $0.43 per share and $256.02 million in revenue [3]. These figures align with the company’s Q1 performance, suggesting a trajectory of steady, if unspectacular, growth. However, the Zacks Rank of #3 (Hold) [3] tempers enthusiasm, indicating the stock is unlikely to outperform the market in the near term. This contrasts with the “Strong Buy” consensus from analysts [2], highlighting a disconnect between short-term caution and long-term optimism.

The upcoming October 22 earnings report [5] will be pivotal. If MakeMyTrip meets or exceeds estimates, the premium valuation could be justified. A miss, however, risks a sharp re-rating.

Risk vs. Reward for Long-Term Investors

For long-term investors, the decision hinges on two factors: the sustainability of earnings growth and the likelihood of a valuation correction. MakeMyTrip’s adjusted operating profit of $47.3 million in Q1 2025 [4]—up 21% year-on-year—demonstrates operational efficiency. Yet, the stock’s current price implies a belief that this growth will accelerate, not merely continue.

The Zacks Rank’s “Hold” recommendation [3] suggests skepticism about near-term outperformance, while the 19% price target [2] reflects confidence in long-term potential. This duality mirrors the broader market’s mixed sentiment: a premium paid for growth, but with risks if execution falters.

Conclusion: A Calculated Gamble

MakeMyTrip’s valuation is undeniably rich, but its earnings trajectory and analyst optimism provide a rationale for the premium. Long-term investors must weigh the company’s ability to sustain growth against the risk of a valuation reset. For those with a high-risk tolerance and a multi-year horizon, the stock could offer substantial rewards if the company delivers on its projections. However, the Zacks Rank’s caution and the disparity between forward and trailing P/E ratios suggest prudence. Investors should monitor the October earnings report closely and consider dollar-cost averaging to mitigate volatility.

Source:
[1] MakeMyTrip (MMYT) Financial Ratios [https://stockanalysis.com/stocks/mmyt/financials/ratios/]
[2] MakeMyTrip (NasdaqGS:MMYT) Stock Valuation, Peer [https://simplywall.st/stocks/us/consumer-services/nasdaq-mmyt/makemytrip/valuation]
[3] MakeMyTrip (MMYT) Q1 Earnings and Revenues Lag ... [https://www.nasdaq.com/articles/makemytrip-mmyt-q1-earnings-and-revenues-lag-estimates]
[4] Earnings call transcript: MakeMyTrip sees 7.8% revenue growth in Q1 2025 [https://www.investing.com/news/transcripts/earnings-call-transcript-makemytrip-sees-78-revenue-growth-in-q1-2025-93CH-4203380]