Manish Adukia

Manish Adukia sought clarification on why hotel revenue growth was impacted despite strong volume growth and GST cuts, especially if take rates should expand in mid-to-budget hotels. He also asked if hotel volume growth would have been faster without the IndiGo disruption, the outlook for marketing and promotion spend (5.6% this quarter), and whether MakeMyTrip's 1-3 year outlook implies continuous reinvestment, leading to EBITDA growth tracking revenue growth rather than significant margin expansion.

Answer

Mohit Kabra, Group CFO, reiterated that margins are tied to booking value, so the GST impact affects absolute margins, but volume-led growth remains strong. Rajesh Magow, Co-Founder and Group CEO, confirmed that flight disruptions adversely impact overall travel, but hotel growth was encouraging despite this. Mr. Kabra stated that the 5.6% marketing spend was not a one-off but reflected a mix shift towards higher-margin businesses and slightly higher customer acquisition costs in budget/mid-segment hotels, without impacting adjusted operating profit (1.8% of gross bookings). Mr. Kabra explained that significant margin expansion from operating leverage largely played out by 2024, and future EBITDA growth will likely track revenue growth unless the accommodation mix significantly shifts beyond 50%.

Manish Adukia questioned why hotel revenue growth was impacted despite strong volume growth and GST cuts, and whether take rates should expand with faster growth in mid-to-budget hotels. He also asked if hotel volume growth would have been faster without the IndiGo disruption and if there's room for acceleration. He inquired about the marketing and promotion spend at 5.6%, asking if it was a one-off or influenced by the mix shift towards budget/mid hotels, and its outlook. Finally, he asked about the 1-3 year outlook, specifically if 20% revenue growth necessitates continuous reinvestment, implying that margins won't expand and EBITDA growth will track revenue growth, questioning if it's still an operating leverage story.

Answer

Mohit Kabra (Group CFO) reiterated that margins are linked to booking value, so the GST impact flows into absolute margins, even if the percentage take rate remains stable. He highlighted the positive demand unlock in price-sensitive segments due to GST, contributing to overall segment growth of 22% despite domestic air disruption. Mr. Kabra confirmed that flight bookings are a lead indicator, and the IndiGo disruption likely impacted hotel growth, noting December was a slower month. He stated that the 5.6% marketing spend was not a one-off but reflected the mix shift towards higher-margin businesses and slightly higher customer acquisition costs in budget/mid-segment hotels, with adjusted operating profit remaining 1.8%+. For the long-term outlook, Mr. Kabra explained that substantial margin improvement from leveraging volumes largely played out by 2024. The current focus is on achieving 20% growth with efficient customer acquisition costs, and significant adjusted operating margin expansion would require the accommodation mix to exceed 50%, with smaller operating leverage gains from fixed costs.

Manish Adukia from Goldman Sachs asked about the sustainability of the international segment's strong growth, the competitive landscape including airline-direct channels and other OTAs, and the company's capital allocation strategy regarding share buybacks.

Answer

Group CEO Rajesh Magow and Group CFO Mohit Kabra attributed strong international growth to online penetration, supply expansion, and macro tailwinds, noting this segment was less impacted by recent headwinds. Mr. Kabra described the competitive landscape as stable, with MakeMyTrip maintaining its lead in domestic air. He also clarified that the share buyback program remains opportunistic rather than being guided by a formal, steady policy or specific price triggers.

Manish Adukia of Goldman Sachs asked about the reasons for MakeMyTrip's dominant market position in India compared to other markets, the potential for margins to exceed the company's 1.8-2% guidance, and the strategy behind the pace of its share buyback program.

Answer

Co-Founder and Group CEO Rajesh Magow attributed the company's market strength to its holistic 'one-stop shop' strategy and consistent execution in a large, underpenetrated market, emphasizing a focus on their own roadmap rather than competition. Group CFO Mohit Kabra clarified that the full-year margin was 1.7%, still below the target range, and the immediate goal is to enter and stabilize within the 1.8-2% band. Regarding buybacks, Kabra described the strategy as 'opportunistic,' aiming to deploy capital during market volatility, with the current authorization not being a constraint.

Manish Adukia from Goldman Sachs asked about the sustainability of the strong mid-20s gross booking growth, particularly in international travel, and what factors could cause a slowdown. He also sought insights into the competitive landscape, specifically regarding IndiGo's direct booking efforts and the stable OTA environment.

Answer

Rajesh Magow, Co-Founder and Group CEO, attributed the robust growth to favorable macro trends in consumer spending on travel and strong execution of the company's omnichannel strategy. He identified a broad economic slowdown as the primary risk to this growth trajectory. Regarding competition, Magow stated that MakeMyTrip's focus on capturing a larger share of the total intermediary market and its multi-channel approach (B2C, corporate, affiliates) allows it to consistently outpace the market, mitigating the impact of any single competitor's direct-to-consumer efforts.

Manish Adukia followed up on the airline direct booking trend, asking about historical precedents and the economic rationale for low-cost carriers. He also questioned the company's capital allocation strategy, specifically the size of the share buyback program and the focus for potential M&A.

Answer

Group CEO Rajesh Magow explained that OTAs provide value through selection and have optimized customer acquisition and service costs, making direct channels not necessarily cheaper for airlines. Group CFO Mohit Kabra clarified the share repurchase plan is part of a larger $150 million program, not capped annually at $60 million. He added that M&A opportunities are being considered in both domestic and international markets to serve the Indian traveler.