MakeMyTrip flight ticket volumes decline; hotels and buses support growth, but margins come under pressure

Why did overall growth still beat expectations despite weaker flight ticket volumes?

In the second quarter of fiscal 2027, MakeMyTrip’s flight ticket volumes fell 6% year over year, a larger decline than the 2% recorded in the previous quarter; adjusted revenue nevertheless grew 20% year over year in constant currency, unchanged from the previous quarter and above Goldman Sachs’ prior forecast of 16%.
Flight ticket revenue grew 14% year over year in constant currency, above Goldman Sachs’ forecast of 7%. The bank attributed this partly to 20% year-over-year growth in gross flight bookings and improved margins provided by airlines during the seasonal low season.
Total gross bookings grew 21% year over year in constant currency, slightly faster than the 20% recorded in the previous quarter and above Goldman Sachs’ forecast of 18%. In US dollar terms, gross bookings growth rose from 9% to 11%.

Gross bookings in the hotels and travel packages business grew 20% year over year in constant currency, similar to the previous quarter; booking volumes grew 18%, although outbound hotel booking volumes recorded only mid-single-digit growth.
Revenue from the bus and other businesses grew 29% year over year in constant currency, slightly below the previous quarter’s 31%. Management said half of the bus business’s growth came from increased supply and the other half from market share gains, and expects the growth momentum to continue.
Air travel demand remains a constraint: in October, year-over-year growth in Indian domestic and outbound air passenger traffic remained weak, though it improved slightly from the previous quarter. Goldman Sachs expects the company’s adjusted flight ticket revenue to grow 12% year over year in constant currency in the third fiscal quarter.

To support demand, the company’s sales and marketing expenses remained high, accounting for 5.43% of gross bookings in the second fiscal quarter; spending to attract customers increased in both the flight ticket and hotel businesses over the past 12 months.
Adjusted operating profit as a proportion of gross bookings fell by 0.1 percentage points quarter over quarter to 1.7%, below Goldman Sachs’ forecast of 1.8%. The report attributed the decline to higher payment gateway fees resulting from rising airfares; cash EBITDA was 51 million US dollars, slightly below the bank’s forecast.
In rupee terms, EBITDA grew 19% year over year in the second fiscal quarter; however, lower near-term margins prompted Goldman Sachs to cut its fiscal 2027 cash EBITDA forecast by 4%.

Goldman Sachs raised its gross bookings forecasts for fiscal 2027 through 2029 by up to 1% and its revenue forecasts by up to 2%; it expects fiscal 2027 revenue to grow 20% year over year in constant currency.
The bank believes some marketing spending can be adjusted as demand headwinds ease and that margins have significant room to expand if air passenger traffic recovers; on that basis, it expects EBITDA in rupee terms to grow by more than 30% in both fiscal 2028 and 2029.
Goldman Sachs maintained its Buy rating and lowered its 12-month price target from 81 US dollars to 80 US dollars. Investors are focused on persistently weak air travel demand, the structure and timing of the share fungibility arrangement, and the impact of agentic commerce on online travel; the company said the timing of its India listing depends on regulatory approvals and market conditions.