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With around 81 companies announcing their third-quarter results for FY2024-25, the market is witnessing a mixed trend in Q3 results. Some companies are experiencing an increase in profits, while others are facing a downturn in their Q-o-Q figures. Among this fleet of financial results, MakeMyTrip has mainly made headlines with its 24% revenue growth in the December 2024 quarter. 

What propelled this growth? And has the company shown similar growth in other financial parameters? Let’s understand the top 3 highlights and reasons for the positive surge of MakeMyTrip. 

Overview of MakeMyTrip:

Source: NASDAQ

Deep Kalra founded MakeMyTrip in 2000. It is a leader in India’s online travel sector. Initially serving the US-India travel market, it expanded to India in 2005. As low-cost airlines gained traction, MakeMyTrip became a go-to platform for booking flights, hotels, and holiday packages. The company has since diversified into homestays, villas, and ground transportation services, including cabs, buses, and trains.

MakeMyTrip is also expanding into the business travel space with myBiz and creating an exclusive platform for travel agents, myPartner. Recently, the company entered the Gulf market, offering competitive deals on flights and hotels. The company remains a dominant player in online travel bookings with its three brands—MakeMyTrip, Goibibo, and RedBus.

Listed on NASDAQ as MMYT, MakeMyTrip has a current stock price of $109.44 and an EPS of $0.46. Its latest quarter, ending December 2024, reported earnings of $0.39 per share, a slight increase from $0.35 a year ago, adjusted for non-recurring items.

Highlights Of The Q3 Financial Results:

Net Profit Trend:

MakeMyTrip has seen an overall increase in the quarterly net profit, with the latest increase being 11.8% y-o-y as of the December 2024 quarter. The sudden spike in the profit in the March 2024 quarter happened because the company achieved its highest-ever annual gross booking, witnessed high repeat rates, and optimized tech costs due to a unified back-end Infrastructure. 

Revenue:

Gross Bookings:

The company’s quarterly revenue trend has been upward. In the December 2024 quarter, revenue reached $267,362 thousand, a 24.8% year-on-year increase over December 2023 ($214,216 thousand). 

The increase was mainly due to strong travel demand in India, both for domestic and international outbound travel, during the quarter ending 31 December 2024 compared to the same period in 2023.

Reasons For The Surge:

1. Growth In Air Ticketing:

The air ticketing segment earned $61.3 million in revenue, an 18% increase from $51.7 million in 2023. However, nearly half of this revenue, $32.4 million, was spent on customer inducement costs, such as discounts and promotions. 

Despite the rise in revenue, profit as a percentage of gross bookings decreased slightly to 6.1%, down from 6.3% in the same quarter last year. The adjusted margins also declined somewhat. Even though the revenue grew, higher costs for discounts and incentives led to a slight dip in profitability, with adjusted margins decreasing from 6.3% to 6.1%.

2. Growth In Bookings Of Hotel Packages:

MakeMyTrip’s hotel and package business grew by 17.2%, reaching $147.1 million for the quarter, up from $125.5 million in 2023. This growth was driven by a 21.9% rise in gross bookings, fueled by more hotel room nights being booked as travel both within India and internationally increased.

Profits also saw a 23.4% rise, reaching $121.9 million, up from $98.8 million last year. However, discounts and promotions impacted profitability. Higher costs associated with these promotions increased to $44.1 million, up from $35.7 million in the previous year. Despite this, the adjusted margin as a percentage of revenue slightly improved from 17.7% to 17.9%.

3. Growth In Bus Ticketing Segment:

The bus ticketing business saw impressive growth of 31.7% this quarter. Revenue reached $31.8 million, up from $24.2 million in the same quarter last year. A rise in demand for bus travel drove this growth. Additionally, profitability in the bus ticketing segment increased by 30.2%, showing strong performance.

Besides these, the company’s quarterly performance was also affected by a recent development in MakeMyTrip (India) Pvt. Ltd. In the third quarter of FY2025, the company’s wholly-owned subsidiary, MakeMyTrip (India) Private Limited (“MakeMyTrip India”), signed a business transfer agreement to acquire a corporate travel and expense management business under the “HAPPAY” brand from VA Tech Ventures Private Limited. The acquisition is valued at up to INR 1.0 billion (or $11.7 million), subject to certain adjustments. Source: Company Press Release

Bottomline:

The Indian travel and tourism sector is growing rapidly, with travelers eager to explore new destinations. While Indian destinations remain popular, countries also intensify efforts to attract Indian travelers. 

The company’s strong financial performance this quarter demonstrates the successful execution of strategic priorities and the resilience of the travel sector. By focusing on cost management and investing in technology and customer experience, the company has capitalized on the growing travel demand, driving profitable growth.

However, as the market evolves, these trends may offer opportunities to strengthen operations along with a scope of further considerations with respect to the growth and marketing plans. So, if you plan to invest in MakeMyTrip, thoroughly research the market factors and company fundamentals to ensure it aligns with your portfolio goals. 

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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

On a day when most sectors on Dalal Street faced challenges, Indian IT stocks stood out by registering notable gains. Heavyweight companies such as Tata Consultancy Services (TCS), Wipro, Infosys, Tech Mahindra, and HCLTech significantly pushed the benchmark indices, especially after a substantial downturn in the previous session. This resilience prompts an important question: What factors drive the surge in IT stocks amid broader market volatility?

Current Performance of IT Stocks

As of yesterday, on 22nd January, the following movements were observed:

• TCS: Shares increased by 3.04%, reaching ₹4,158.45.
• Wipro: Experienced a 3.37% rise, trading at ₹308.40.
• Infosys: Saw a 3.11% uptick, with shares closing at ₹1,856.70.
• HCLTech: Rose by 1.43%, reaching ₹1,827.40.
• Tech Mahindra also traded higher, contributing to the positive trend in the IT sector.

ALSO SEE: STOCKS SCREENER

These movements were reflected in the Nifty IT index, which rose over 2% and was the best-performing sectoral index of the day.

Factors Contributing to the IT Stocks Rally

Several key elements have contributed to the robust performance of Indian IT stocks:

Optimism Around AI Investments

A significant rally driver was US President Donald Trump’s announcement of a private sector investment of up to $500 billion to fund artificial intelligence infrastructure. This optimism offset uncertainties related to his tariff policy, promoting stocks.

Positive Global Cues

The U.S. markets exhibited strength, with the Dow Jones Industrial Average ending 1.24% higher and the Nasdaq Composite rising 0.64%. This global optimism has a cascading effect on Indian IT stocks, given their significant exposure to U.S. markets.

Robust Q3 Results

Major IT firms like TCS, Infosys, and Wipro reported strong third-quarter earnings, surpassing market expectations. Infosys, which rose 3.2%, was the best-performing Sensex stock and the biggest contributor to index gains, followed closely by TCS.

Rupee Depreciation

The Indian rupee’s depreciation against the U.S. dollar has positively impacted IT companies. Since a significant portion of their revenue is earned in dollars, a weaker rupee translates to higher earnings when converted to the local currency.

Market Sentiment and Analyst Outlook

Analysts have maintained a positive outlook for the IT sector. Global brokerage firms have given ‘Buy’ ratings to several IT stocks, anticipating growth driven by AI and cloud computing investments. Source: Mint

Market Overview

Despite the rally in IT stocks, the broader market faced selling pressure. On Wednesday, the Sensex ended the session at 76,405, with a gain of 566 points (0.75%), while the Nifty 50 index closed at 23,155, with a gain of 131 points (0.6%). However, broader indices faced declines, with the Nifty Midcap100 falling 1.3% and the Nifty Smallcap100 dropping 1.6%.

Market breadth remained weak, with 2,802 stocks declining and only 1,142 advancing on the BSE. The total market capitalisation of BSE-listed firms declined by ₹2.2 trillion to ₹422 trillion, with a total decline of ₹20.1 trillion so far this month.

Understanding the Dynamics: A Step-by-Step Breakdown

To comprehend the surge in IT stocks amid market volatility, let’s dissect the contributing factors:

Global Market Influence

Indian IT companies have substantial exposure to global markets, particularly the U.S. Positive movements in U.S. indices often increase investor confidence in Indian IT stocks.

Corporate Earnings

Strong quarterly results indicate robust business performance and future growth potential, making these stocks attractive to investors.

Currency Fluctuations

A depreciating rupee benefits exporters like IT companies, as their dollar-denominated revenues yield higher returns when converted to rupees.

Policy Announcements

Government initiatives and private sector investments, such as the $500 billion AI infrastructure funding, boost investor confidence in long-term growth prospects.

Analyst Recommendations

Positive analyst reports and ‘Buy’ ratings can influence investor behavior, increasing demand and higher stock prices.

Conclusion

The resilience of Indian IT stocks amid broader market volatility can be attributed to strong corporate earnings, favorable global market trends, currency advantages, and positive sentiment around AI investments. These factors collectively strengthen investor confidence, leading to the observed surge in IT stock prices. As the global economic landscape continues to evolve, the performance of these companies will remain a focal point for market participants.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

The financial scene in India is buzzing with changes, and one of the latest game-changers is SEBI’s introduction of Specialised Investment Funds (SIFs). SIFs are tailored investment options for savvy investors ready to explore advanced strategies and diverse asset classes.

This new asset class, between mutual funds and PMSes (Portfolio Management Services), will introduce Indian investors to various new investment products and strategies.

SEBI has set a minimum investment bar of ₹10 lakh for SIFs, making it clear that these funds are for those serious about investing. The available range of products now spans mutual fund schemes starting at ₹10, PMSes with a minimum investment of ₹50 lakh, and Alternative Investment Funds (AIFs) requiring at least ₹1 crore. Source: Moneycontrol

Let’s break down what SIFs are all about, why this move matters, and how it shakes up the investment world.

What Are Specialised Investment Funds (SIFs)?

SIFs are a new category of funds designed to offer advanced investment opportunities beyond traditional avenues like equity mutual funds or fixed deposits. 

SEBI’s new framework for SIFs exempts accredited investors (These investors are considered financially sophisticated and capable of handling higher-risk investments) from certain rules. Mutual funds can now offer investment strategies in open-ended, close-ended, and interval formats, catering to investors with varying risk levels and investment goals. 

SIFs allow investors to diversify their portfolios in a transparent structure. Launching new strategies will follow the same process as mutual funds, with clear details on subscriptions, redemptions, and fees in line with mutual fund regulations. Source: livemint

Key Features of SIFs

• Diversification of Asset Classes: SIFs expose asset classes typically inaccessible to retail investors, such as real estate, infrastructure, or private debt.
• Professional Management: SIFs are managed by experts with deep knowledge of specific sectors, ensuring informed investment decisions.
• Regulated Framework: SEBI’s oversight ensures transparency, safeguarding investors from potential malpractices.
• Customized Strategies: These funds often employ tailored strategies, including hedging and leverage, to optimize returns.

How SIFs Differ from Traditional Mutual Funds

While both SIFs and mutual funds pool resources from investors, their objectives and structures are distinct:

SEBI’s New Rules for Specialised Investment Funds (SIF)
Feature	SIF	MF
Strategies	Advanced	Standard
Structure	Open, Close, or Interval	Same
Minimum Investment	₹10 Lakh across all strategies	Starts from 100
Debt Instruments	<20% per Issuer	<10% per Issuer
Company Ownership	<15% of Company	<10% of Company
Equity Instruments	<10% of corpus in a single company	Same
REITs/InvITS	<20%, per issuer <10%	<10%, per issuer 5%
Distinct Identity	Separate Building	NA
Tax Benefit	Same	Standard, Eg, Equity Fund, STCG 20%, LTCG 12.5%

Let’s look at the differences between SIFs and Mutual Funds.

• Investment Limits and Flexibility

With a minimum investment of ₹10 lakh, Specialised Investment Funds (SIFs) provide asset managers with more flexibility compared to traditional mutual fund schemes. SIFs allow up to 15% allocation in a single security, which is notably higher than the 10% limit set for mutual funds. For fixed-income strategies, exposure can reach 20% in a single issuer, potentially increasing this limit to 25% with board approval. However, the existing 10% limit for a single issuer remains for traditional fixed-income strategies.

• Expense Ratio and Fees

The cost structure for SIFs mirrors that of mutual funds. For example, equity funds can charge a maximum Total Expense Ratio (TER) of 2% for the first ₹250 crore. After that, the cost decreases incrementally—1.75% for the next ₹1,250 crore, 1.60% for amounts between ₹1,500 and 3,000 crore, and so on. Additional expenses can also be charged over the TER.

• Increased Investment Limits for REITs and INVITs

A significant change with SIFs is doubling permissible investment limits in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (INVITs) to 20%. This provides more flexibility in allocation and opens new avenues for diversification. In contrast, the limit for these investments in mutual funds is currently capped at 10%. Source: Moneycontrol

SEBI’s ₹10 Lakh Minimum Threshold: What It Means

The decision to set a minimum investment threshold of ₹10 lakh aims to ensure that only informed and financially capable investors participate in SIFs. Here’s why:

• Targeting Sophisticated Investors: SIFs involve complex strategies and high risks. A higher threshold ensures participants understand the risks and have sufficient financial backing.
• Mitigating Retail Participation Risks: By limiting access to high-net-worth individuals (HNIs) and institutional investors, SEBI protects less-informed retail investors from potential losses.
• Encouraging Long-term Investments: The substantial minimum investment promotes a long-term approach, discouraging speculative trading.

Advantages of Investing in SIFs

• Access to Advanced Strategies: Investors gain exposure to sophisticated strategies like arbitrage, hedging, and leverage, which are typically unavailable in traditional funds.
• Portfolio Diversification: SIFs allow investors to diversify across unconventional asset classes, reducing reliance on traditional equities and bonds.
• Potential for Higher Returns: With advanced strategies and exposure to high-growth sectors, SIFs offer the potential for superior long-term returns.
• Professional Expertise: Experienced fund managers with sector-specific knowledge oversee these funds, enhancing decision-making quality.

Risks Associated with SIFs

While SIFs offer lucrative opportunities, they come with their share of risks:

• High Entry Barrier: The ₹10 lakh threshold limits access to wealthy investors, excluding retail investors.
• Complex Strategies: Advanced strategies can be challenging to understand, requiring a high level of financial literacy.
• Market Volatility: Investments in REITs, InvITs, and private equity are subject to market fluctuations, making them inherently risky.
• Illiquidity: Many SIFs have lock-in periods or restrictions on premature exits, reducing flexibility.

SEBI’s Regulatory Framework for SIFs

SEBI’s regulatory approach aims to balance protecting investors and fostering market growth. Key regulations include clear disclosure requirements, where fund managers must outline investment objectives, strategies, and risk factors. 

Only qualified and experienced professionals with proven track records can also manage SIFs, ensuring credibility. Regular audits and transparency in reporting further ensure compliance, which helps build trust among investors.

How SIFs Fit into India’s Financial Ecosystem

The introduction of SIFs aligns with India’s evolving financial market:

1. Catering to HNIs and Institutional Investors: With rising wealth, demand for sophisticated investment products has increased among HNIs.
2. Boosting Alternative Investments: SIFs support sectors like infrastructure and real estate, which are crucial for economic growth.
3. Complementing Traditional Funds: SIFs provide an alternative for investors seeking diversification beyond conventional equity and debt funds.

Impact on Investors and Market Dynamics

The launch of SIFs is expected to offer several benefits. It will expand investment options by providing access to advanced strategies and unconventional asset classes. Additionally, the sophisticated nature of SIFs could attract global investors looking to tap into India’s growth potential. Moreover, the complexity of SIFs will likely boost financial literacy, encouraging the development of educational initiatives to help investors better understand these opportunities.

Expert Opinions on SIFs

Market experts believe SIFs hold significant potential. They encourage financial sophistication by pushing investors to grasp advanced financial concepts, promoting a culture of informed decision-making. Focusing on alternative assets and advanced strategies could spur innovation within India’s financial sector. 

However, the high entry barrier and complexity of SIFs may limit participation from retail investors, presenting challenges in inclusivity and broader investor engagement.

Who Should Invest in SIFs?

SIFs are best suited for:

1. High-Net-Worth Individuals (HNIs): Investors with substantial disposable income and a high-risk appetite.
2. Institutional Investors: Corporations, pension funds, and endowments seeking diversified portfolios.
3. Sophisticated Retail Investors: Individuals with a strong understanding of financial markets and advanced investment strategies.

Conclusion

SEBI’s Introduction of Specialised Investment Funds (SIFs) is a milestone in India’s financial market evolution. While the ₹10 lakh minimum threshold ensures participation by informed investors, it also highlights the need for enhanced financial literacy. SIFs promise diversification, professional management, and the potential for high returns, making them a valuable addition to the investment landscape. However, their complexity and high-risk nature necessitate caution and thorough understanding.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

The Indian telecom giant Vodafone Idea made headlines recently as its share price surged by 17%, hitting the upper circuit limit on Monday, January 20, 2025. The surge was fueled by speculation of a possible AGR (Adjusted Gross Revenue) dues waiver, boosting optimism among investors and the market. Source: CNBCTV18

However, the stock opened almost flat on Tuesday and dropped over 4% during morning trading. This came after the company issued a clarification late Monday, stating it had not received any communication from the government regarding an AGR dues waiver. Source: Mint 

On January 20, 2025, the stock exchange asked Vodafone Idea Ltd to clarify a media report titled “Vodafone Idea, Airtel shares in focus as govt plans AGR dues waiver.” In response, Vodafone Idea stated after market hours, referring to a January 18, 2025, article titled “In Big Relief to Telcos, Govt weighs over ₹1 lakh crore AGR dues waiver.”  Source: Mint

What Triggered the Surge?

Speculation about a possible AGR dues waiver by the Indian government fueled Vodafone Idea’s share price surge. AGR dues have been a significant challenge for telecom operators in India, with companies like Vodafone Idea struggling with substantial payment obligations. A possible relief or restructuring of these dues could significantly ease the financial burden on the company.

According to a TRAI report, telecom operators’ gross revenue rose to ₹91,426 crore in the July–September 2024 Quarter, up 10.5% year-over-year, driven by tariff hikes. The government calculates levies based on adjusted gross revenue (AGR), which grew 13.11% year-over-year to ₹75,310 crore. Vodafone Idea’s AGR increased by 4.39%, from ₹7,507.65 crore to ₹7,836.98 crore.

Possible AGR Relief Expected in Union Budget 2025

Reports suggest that the government may announce relief measures for telecom companies as early as February 1, during the Union Budget 2025. The proposed relief includes a partial waiver of Adjusted Gross Revenue (AGR) dues, potentially reducing liabilities for Bharti Airtel and Vodafone Idea by ₹38,000 crore and ₹52,000 crore, respectively.

The government is reportedly considering waiving penalties and interest components of AGR dues. This move comes after telecom operators, including Vodafone Idea and Bharti Airtel, sought relief following the Supreme Court’s September 2024 rejection of a curative plea to reassess AGR demands. Source: CNBCTV18

AGR Dues Breakdown

• Vodafone Idea: Estimated AGR dues of around ₹80,000 crore
• Bharti Airtel: Estimated AGR dues of approximately ₹42,000 crore

According to IIFL Securities, Vodafone Idea’s stock could see a short-term boost if the relief is announced. After the potential AGR waiver, The brokerage estimated a fair value of ₹10 per share for Vodafone Idea.

Understanding AGR and Its Impact

Adjusted Gross Revenue (AGR) refers to telecom operators’ revenue from telecom services. In 2019, the Supreme Court of India ruled that telecom companies must include non-core revenue in their AGR calculations, leading to massive liabilities for companies like Vodafone Idea.

While the company has made partial payments, the outstanding amount remains substantial. This liability has weighed heavily on its financial health, affecting its ability to invest in network expansion and other critical areas.

Why Is an AGR Waiver Crucial for Vodafone Idea?

Vodafone Idea has been walking a tightrope, juggling massive debts, intense competition, and dwindling market share. Here’s why an AGR waiver could be a game-changer:

Debt Reduction

An AGR waiver would provide much-needed relief, reducing the debt burden and allowing Vodafone Idea to focus on operational improvements.

Increased Investor Confidence

Positive developments like an AGR waiver can restore investor confidence, attract fresh capital, and improve the company’s stock performance.

Operational Stability:

Reduced financial pressure would enable Vodafone Idea to invest in upgrading its network infrastructure, enhancing service quality, and competing more effectively with rivals.

Market Reaction and Investor Sentiment

The market’s response to the potential AGR waiver buzz was positive. Vodafone Idea’s stock hit the 17% upper circuit, reflecting strong investor interest. Trading volumes also spiked, indicating heightened activity and optimism among market participants.

While the prospect of an AGR waiver is promising, its implementation remains uncertain. Investors are advised to exercise caution and monitor further developments closely.

Challenges Ahead for Vodafone Idea

Despite the positive momentum, Vodafone Idea faces several challenges that could impact its recovery:

Stiff Competition:

Reliance Jio and Bharti Airtel continue to dominate the telecom market, offering competitive pricing and superior service quality.

Capital Requirements:

Even with an AGR waiver, Vodafone Idea will need significant capital infusion to invest in 5G infrastructure and improve its network capabilities.

Regulatory Hurdles

The company’s future depends heavily on favorable regulatory decisions, including spectrum pricing and other policy measures.

Analysts Perspectives

While the recent surge in Vodafone Idea’s share price has grabbed attention, analysts remain divided on its long-term prospects. According to a CNBC TV18 report, some experts believe the stock’s fair value is below its Follow-on Public Offering (FPO) price, highlighting concerns about its financial stability and growth potential.

On the other hand, optimists argue that strategic initiatives, coupled with potential government support, could pave the way for a turnaround. The company’s ongoing efforts to raise funds through equity and debt are steps in the right direction.

What Lies Ahead?

The road ahead for Vodafone Idea is fraught with uncertainties, but there are reasons for cautious optimism:

Government Support:

• As evidenced by past relief measures, the government’s willingness to support the telecom sector bodes well for Vodafone Idea.

Fundraising Plans:

• The company’s efforts to secure fresh capital will be crucial in addressing its financial woes and funding future growth.

Strategic Partnerships:

• Collaborations with global technology and telecom players could provide the expertise and resources needed to strengthen Vodafone Idea’s position.

Conclusion

Vodafone Idea’s recent share price rally underscores the impact of positive market sentiment and speculation. While the potential AGR waiver buzz has reignited hope for the company’s revival, it’s essential to approach the situation with a balanced perspective. The telecom operator’s long-term success depends on favorable policy decisions, strategic initiatives, and robust execution.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.