Debt-free MakeMyTrip sets aside money for investment opportunities — while its own revenue is down 95%

• The company has also managed to cut down its adjusted net losses to $21.3 million, from $29 million in the same quarter the previous year.
• The company’s total liquidity stood at $174 million as of June 2020 – which will give the company a runway for the next 6-8 quarters.
• Check out the latest news and updates on Business Insider.

India’s largest online travel aggregator MakeMyTrip earnings results for the April-June quarter show the extent of impact that this pandemic has had on the travel and tourism industry. MMT’s revenues have fallen by 95.5% from $141.7 million to $6.3 million.

However, the company has also managed to cut down its adjusted net losses to $21.3 million, from $29 million in the same quarter the previous year. But that doesn’t bother the company as much as the weakness of its peers excites it. The management said it is keen on acquisitions, which will help beef up its market share in online travel bookings.

However, it may not come as a surprise for investors as the stock has lost 17% of its value in the last one month. Here’s how the revenue has decreased for the company across segments. MakeMyTrip currently has over 50% market share in all the verticals.


Acquisitions on the cards

The company had $174 million in cash as of June 2020, which will give the company a runway for the next 6-8 quarters, said Mohit Kabra, Chief Financial Officer of MMT. The company has said that even though it has zero debt, it has opened avenues for additional funds to explore any growth opportunities that might come their way.

Analysts too expect MMT to explore acquisition opportunities. “We expect the impact of the COVID-19 outbreak will lead to consolidation in the OTA space given stretched peer balance sheets, which could lead to more than 10 percentage points of market share gain for MMYT (in hotels) over the next three years,” said a recent report by Goldman Sachs.

The company has also secured credit and guarantee facilities of approximately $100 million. “Which includes a $70 million facility from an affiliate of our largest shareholder and the balance from a commercial bank in India,” said the company’s statement.

MMT’s top management remained hopeful of the quarters to come as they said that travel has seen recovery since July.

“We have begun to see early signs of recovery in our domestic travels business. Our first quarter performance reflects the bulk of the impact the lockdown had on our business. During the quarter, we took painful but necessary fixed cost reductions and fully flexed our variable costs to ensure we had ample liquidity to re-emerge stronger from the quarter ,” said Deep Kalra, Group Chairman of MakeMyTrip.

The company is also planning to restore salaries of frontline workers and middle management staff by September, as it hopes the momentum of the business will be assured.

CORRECTION: The headline has been updated after the company management reached out to Business Insider.


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