Rising Internet Access, Disposable Incomes In India - Profit Through MakeMyTrip

The company's P/E is negative (most likely artificially suppressed, especially since the industry trades several hundred times earnings), and expected earnings growth is above industry averages. I have seen several big investors agonize over ways to capitalize on the rising internet penetration in India, including through listed Indian internet ADRS like SIFY and REDF. But both those have declined sharply since their heydays, and offer little return in the current ranges. Here is the perfect opportunity, with the number of internet users in India expected to double from 2012 to 2015. Online travel is riding the wave, and the internet's share of total travel bookings has risen from 23% in 2009 to 30% in 2012. MMYT's ADR allows us to capitalize on this trend, as well as on the rising middle class which is expected to rise by 67% between 2011 and 2016. Considering how large our (India's) population is (1.25 bn people at last count), 67% of the 2011 size of 20% is a significant number of people entering the middle class. Not only is MMYT still an early-stage company because of its online nature (which allows us to get in early), it already enjoys a dominant position in the market. It is currently the largest online travel booking company in India, with a market share of over 50%, despite international majors like Travelocity and Expedia spending the big bucks. I'm not surprised, considering I used it on my last travel. What did I use it for? You guessed it: hotel booking.

Investments in American Depository Receipts (ADRs) offer American retail investors the opportunity to benefit from trends in emerging markets. As emerging economies follow the economic paths already travelled by more mature (and stagnant) economies, investors from these markets can use the benefit of experience to capitalize on trends that have faded in their home markets but are only now emerging in growing economies, such as the rise in e-commerce and the rapid growth of internet connectivity. MakeMyTrip is one such opportunity.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Alpha Stockman 3 years ago Member's comment

Good read, thanks.