Online travel portal, MakemyTrip is exploring further acquisitions to shore up revenues and expand its international footprint. While MakeMyTrip recently acquired Singapore-based Luxury Tours, rival firms like Cleartrip are tapping the Gulf market, which is now connected with low-cost carrier, IndiGo. The Gurgaon-based portal turned profitable this year for the first time since its launch 11 years ago. The company posted a net profit of USD 4.8 million (Rs 23 crore) for the year ended March 2011.
Its market capitalisation of USD 831.8 million (Rs 3,993 crore) is higher than Jet Airways (Rs 2,096 crore) and Kingfiser (Rs 1,164 crore), the two largest Indian carriers. However, its capitalisation is much less in comparison to other travel portals such as Ctrip.com, Expedia and Priceline, according to a report by Aneesh Phadnis in Business Standard. A MakemyTrip spokesperson said the company now planned to use the funds it raised during its initial public offering and follow-on offering on mergers and acquisitions largely. “We are exploring opportunities to acquire travel firms. Along with picking up a 79 per cent stake in luxury tours, we also acquired 19 per cent in online travel search engine ixigo.com last month,” he added.
Over 90 per cent of MakeMyTrip’s revenues come from India, and airline ticking accounted for 68 per cent of revenues in the first quarter of 2011- 12. However, the company is now scaling up operations outside India and is focusing on hotel reservations and the leisure travel business. “Margins in airline business are under pressure and agent commissions are reducing. Every website is trying to hard-sell holiday packages as margins are higher in that business,” says a travel analyst. In the first quarter of FY 2012, air business contributed 68 per cent of the net revenue, while hotels and packages contributed 28 per cent and emerging segments (like rail, bus and travel insurance) contributed the balance four per cent.