There was plenty of buzz behind MakeMyTrip (MMYT) when India's largest travel website operator went public two years ago.
The stock soared 89% on its first day of trading, making it the hottest debut since 2007 at the time.
It didn't seem to matter that MakeMyTrip was too small to command what wound up being a $1 billion market cap at its peak. It didn't seem to matter that India's economic challenges make it less savory a market for travel than investors find in other countries.
MakeMyTrip was hot. And now it's not.
No Hooray for Bollywood
Shares of MakeMyTrip shed 17% of their value on Tuesday after posting another quarter of disappointing financial results. The stock has shed nearly two-thirds of its value over the past year.
Net revenue, after backing out service costs, slipped 6% to $20.2 million. MakeMyTrip experienced a healthy surge in hotel bookings, but air ticketing revenue -- accounting for the lion's share of revenue at 72% of the mix -- tumbled 13%.
Sure, a major factor behind the uninspiring performance is that the Indian rupee is getting slammed. On a constant currency basis -- which essentially means that we look at MakeMyTrip's financials without converting the numbers into U.S. dollars -- revenue less service costs actually climbed by nearly 13%.
It's still not good enough, and the results get uglier as you work your way down the income statement.
Last year's operating profit is now an operating loss in the fiscal second quarter. Adjusted net income, while positive, is still 27% lower than its showing during the second quarter of fiscal 2012.
There Are Far Better Portals Out There
Investors are taking on risks buying into the MakeMyTrip story. They're banking on market-thumping growth to offset the geopolitical uncertainties of buying into the world's second most populous nation.
For now, it's just not worth it.
Ctrip.com (CTRP) posted its latest financial results on Monday. As China's largest online travel portal, some investors referred to MakeMyTrip during its IPO in August of 2010 as the Ctrip of India. Well, Ctrip has also been a bit of a disappointment lately. Revenue growth has slowed. Margins have been pressured, leading to uneven bottom-line results. However, Ctrip did manage to post a 20% spurt in revenue on Monday.
There are even plenty of stateside companies growing faster than MakeMyTrip these days. Priceline.com (PCLN) reported last week. The "name your own price" portal saw its revenue soar 25% in its latest quarter. Priceline also does a lot of business overseas. In fact, economy-ravaged Europe is its biggest market. On a local currency basis, Priceline's year-over-year revenue would have surged 34%.
Then there was market leader Expedia (EXPE), which clocked in last month with a respectable 18% boost in revenue.
Why India Matters to You
Investors should still keep an eye on India. The country has been ramping up its commitment to get the country's roughly 1.2 billion residents online, and that will be good news eventually for MakeMyTrip and other online players.
However, this doesn't mean that investors have to shop local. Google (GOOG) is actually India's most popular website, according to traffic tracker Alexa.com. It is followed by Facebook (FB), and then by Google's own video-sharing juggernaut YouTube.
Those looking to buy pure plays may want to look beyond the Internet. Indian banking giant HDFC Bank (HDB) and auto maker Tata Motors (TTM) are safer bets. HDFC is trading near a new 52-week high and Tata Motors trades at a very low earnings multiple.
There may very well be a time when MakeMyTrip gets a chance to take off. For now, it's simply grounded at the tarmac.
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Google, Facebook, and Ctrip.com International and has bought calls on Facebook. Motley Fool newsletter services have recommended buying shares of Facebook, Priceline.com, Google, and Ctrip.com.
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