MakeMyTrip's 21% Growth Comes With an Airfare Asterisk

The travel platform is winning share in hotels and buses while AI assistant Myra becomes its answer to agentic commerce — but operating leverage is still waiting on airfares to normalize.

MMYT · Earnings Call · 2026-10-26

MakeMyTrip reported fiscal Q2 2027 into a difficult Indian travel market: the West Asia conflict, high ATF prices and a weaker rupee all weighed on air demand. Yet gross bookings reached $2.7 billion, up 20.9% year-on-year in constant currency, and adjusted operating profit rose 13.8% to $46.2 million. The catch is that adjusted operating margin slipped to 1.7% of gross bookings from 1.8%. Growth is real; operating leverage is not yet.

Air Ticketing remains the swing factor. “The West Asia conflict and resulting inflationary pressures due to high ATF prices and INR depreciation have weighed on air travel demand, both for international and domestic air travel.” — Rajesh Magow, Co-Founder and Chief Executive Officer · 2026-10-26 Domestic departures fell 7% and international departures fell 4%, while fares rose 25% to 30%. That is an ugly mix for an OTA whose air revenue is tied to ticket volume, not ticket value.

The airfare denominator problem

The quarter's most useful disclosure is arithmetic, not narrative. Air ticketing adjusted margin still grew 14.3% in constant currency to $108.6 million on better ancillary attach and unit economics, but the profitability optics are distorted by how the business charges for air versus how it pays for processing.

Our air ticket revenue is largely linked to number of tickets booked, while payment gateway charges are linked to the total booking value. With air fares going up by 25%-30%, processing each booking became more expensive without a corresponding increase in revenue per ticket.
Dipak Bohra, Chief Financial Officer · 2026-10-26

That is a new and cleaner explanation for why a 21% bookings-growth quarter produced only a 1.7% operating margin. It also means the margin debate is less about competition than about a denominator inflated by airfare inflation.

Management is not hiding the cost side. Inducement cost rose to 5.4% of gross bookings from 5.2%, and customer acquisition cost is higher, but Mohit Kabra argues the mix shift toward hotels and ground transport justifies it: “With this improved margin businesses increasing share in the mix, our ability to spend a little more on customer acquisition is much better.” — Mohit Kabra, Chief Executive Officer · 2026-10-26 This is consistent with the posture from the August call, when he said “we want to kind of press on building market share during these turbulent times rather than kind of focus on building profitability.” — Mohit Kabra, Chief Operating Officer · 2026-08-03 The company has been choosing share over near-term margin for several quarters. The new wrinkle is that airfare inflation makes that choice look worse in the reported margin line than it does in the underlying mix.

The quiet non-air engine — and the GST fade

The resilience is coming from the rest of the platform. Hotels and packages adjusted margin grew 20.2% in constant currency to $116.8 million, with standalone room nights up 18.6% and domestic room nights up 20.4%. International room nights still grew mid-single digits despite the outbound disruption. The Hotel segment is now the largest profit pool and the main reason total non-air mix reached 63.2% from 61.5% a year ago. Bus ticketing adjusted margin rose 29% to $45.1 million on 24.7% volume growth, and the other segment — intercity cabs, rail, insurance, forex, tours and activities — grew 29.8% to $24.4 million. Intercity cabs alone are growing above 40% year-on-year, albeit from a small base.

What is missing from the current keyword set is just as telling. GST rationalization was a top-five theme in the prior quarter, with GST rate and GST impact driving hotel volume. It is absent from the current top 30. The GST comparison has annualized, and management has stopped using it as a demand lever. The new demand story is domestic short-haul, pilgrimage and drive-down travel, plus buses and cabs as substitutes for expensive flights. That is a more cyclical mix than the GST tailwind was, and it explains why the company is growing through the air downturn but not yet expanding margins.

Myra: from demo to distribution defense

The freshest company-specific theme is AI, and this quarter it moved from product language to operating metrics. Agentic AI and agentic commerce entered the top 30, while General purpose assistants became the explicit competitive frame. Myra now handles more than 90,000 daily conversations and assists over 3,000 bookings a day. Customers who engage with Myra convert at roughly 1.7x the rate of those who do not, rising above 2.1x in tier-two and tier-three cities, which account for about 55% of Myra conversations. Myra also resolves more than 53% of post-booking flight and hotel queries autonomously. Semantic search is now about 10% of hotel searches, with conversion roughly 24% higher than filter-led search.

The trajectory matters. In January, Rajesh Magow described Myra as having grown from 20,000-25,000 interactions a day to about 50,000. “from, let's say, a couple of months ago, about 20,000, 25,000 a day, we have now touched about 50,000 interactions a day” — Rajesh Magow, CEO · 2026-01-21 The current 90,000 daily conversations nearly doubles that base in about nine months. More importantly, management now has a crisp answer to the disintermediation fear:

A general assistant can recommend. A travel platform is accountable for delivery.
Rajesh Magow, Co-Founder and Chief Executive Officer · 2026-10-26

The moat argument rests on fragmented Indian supply, proprietary transaction data and post-booking fulfillment — all things a horizontal assistant cannot easily replicate. The early conversion and service-resolution numbers support the claim, but they are still early. If agentic commerce changes how top-tier travelers begin their search, the OTA's direct traffic could come under pressure; if it mainly brings more tier-two and tier-three users online, Myra is a distribution expansion tool.

The productivity angle is quieter but relevant. Management links AI to faster partner onboarding, content creation and customer support, and says early efficiency gains are creating room to fund growth. That is the right way to frame it: AI is not yet a margin story, but it is becoming a cost-offset story.

The IPO overhang

The other new keyword is confidential filing, which jumped to the top of the company's theme list. MakeMyTrip has filed confidentially for a potential India IPO of its wholly owned subsidiary and is waiting on regulatory approval. Management gave no timeline, but noted the confidential route buys roughly 18 months of validity. “we have already made a confidential filing. One of the reasons for doing a confidential filing was that in troubled markets, confidential filing allows you a much larger tenure, through which it is valid. So it's almost valid for 18 months.” — Mohit Kabra, Chief Executive Officer · 2026-10-26 Analysts pressed on whether a listing is six to nine months away; the answer was effectively no change and no guidance. That is a company-specific catalyst, but also a holding-company-discount overhang until fungibility with the Mauritius-listed entity is addressed.

The quarter, then, is a share-gain story in a down air market, with a clear operating engine underneath and a clear optical drag on top. If airfares normalize, the gross-bookings denominator shrinks and the margin gap should narrow. If they do not, Myra and the non-air mix have to carry the profit story. The stock may wait for one of those two things to become visible before it pays for the AI narrative.