MakeMyTrip Limited

Hello, everyone. I'm Vipul Garg, Vice President, Investor Relations at MakeMyTrip Limited. And welcome to our fiscal year 2023 first year, first quarter earnings webinar. Today's event will be hosted by Deep Kalra, our company's group chairman and chief mentor. Joining him is Rajesh Mago, our co-founder and group chief executive officer, and Mohit Kabra, our group chief financial officer. As a reminder, this live event is being recorded by the company and will be made available for replay on our AYA website shortly after the conclusion of today's event. At the end of these prepared remarks, we will also be hosting a Q&A session. Furthermore, certain statements made during today's event may be considered forward-looking statements within the meaning of Safe Harbor Provision of U.S. Private Securities Litigation Reform Act of 1995. These statements are not guarantee of future performance, are subject to inherent uncertainties, and actual results may differ materially. Any forward-looking information relayed during this event speaks only as of this date, and the company undertakes no obligation to update the information to reflect changed circumstances. Additional information concerning these statements are contained in the Risk Factors and Forward Looking Statements section of Companies Annual Report on Form 20-F, filed with the SEC on 12th July 2022. Copies of these filings are available from the SEC or from Companies Investor Relations Department. I would like to now turn over the call to Rajesh. Over to you, Rajesh.

Thank you, Vipul. Welcome, everyone, to our first quarter earnings call of fiscal 2023. We are glad to report a robust quarter-on-quarter growth of 63.3% in gross bookings on constant currency basis, signaling strong recovery in travel sentiment and demand post the third wave of COVID-19 infections in India. As shared earlier, we have built significant operating leverage in our business over the last two years, which has helped us deliver our highest quarterly adjusted operating profit of over 16.5 million compared to about $12 million in the last reported quarter. It is heartening that after two years of being under the impact of COVID-19 pandemic, this new fiscal year has started on a strong note with public behavior and sentiment back to pre-pandemic normal, given the comfort of strong vaccination coverage in India and the latest variants of COVID-19 reporting milder infection with minimal hospitalization and fertility rate. Accordingly, we have seen strong recovery in leisure travel and domestic destinations, as well as improving demand in short haul international destinations in Southeast Asia, UAE, and Nepal, et cetera. Globally and in India, governments and central banks have increased the efforts recently to tame inflationary pressures that had built up over the last few quarters. As the effect of these measures become more visible in the coming quarters, there is likelihood that airfares, which have been higher than normal during Q1 due to higher oil prices, will become more attractive, leading to improved domestic and international travel demand. Further, considering the consumer sentiment for travel is still very positive. With work patterns gradually getting back to pre-pandemic normal while we have seen increased demand for office commute during the quarter, we also expect corporate travel demand momentum to further pick up in the coming quarters, aiding overall demand recovery for the travel industry. Overall, our current estimate is that travel, both domestic and international, should recover fully to pre-pandemic levels by the end of this year. apart from the short-term positive outlook on demand recovery we believe there are significant tailwinds supporting robust growth in travel industry over the medium term of next three to five years firstly due to the pandemic the travel industry saw a significant temporary decline and hence the pent-up demand is likely to drive accelerated growth with return of normalcy secondly Post the pandemic, there is a permanent shift in how people perceive travel with propensity to travel being much higher and experiences becoming even more important. Thirdly, there's also a secular uptick in the online buying behavior, which bodes very well for us as most segments of the Indian travel industries have traditionally had low online penetration. Lastly, and most importantly, India is still an under-penetrated travel market with a huge scope of growth Some of the factors favoring these growth trends are expansion of infrastructure, increasing per capita income, increasing disposable incomes, and higher willingness to travel and book online among the young working population. As per the Ministry of Civil Aviation estimates, Indian aviation will become world's third largest aviation market by 2024. Development of new airports, highways, and addition of hotels will help grow domestic tourism manifold in coming years. Almost all the airlines have placed orders for new planes over the years. On the other hand, few hospitality chains have also announced their expansion plans, which should add to capacity and fuel domestic travel growth. As a comprehensive travel service provider, we hope to leverage these macro growth trends. Let me now talk about the performance in the key travel segments, and I would then share the prospects on some of the future growth areas, both on the supply side and demand side. Coming to business segments, in our air business, we continue to maintain our leadership position in market share. We are recovering faster than the market. During the quarter, we witnessed over 90% recovery as compared to pre-pandemic levels. This is majorly on account of travel demand, opening and more people traveling during the summer holiday season. I talked about high airfares earlier. This has affected recovery momentum to some extent. Leisure destinations like Srinagar, Dehradun, Leh have shown more than 100% recovery, while business and metro destinations like Delhi, Mumbai, Bangalore, etc. have lagged a bit due to high fares and corporate demand still short of full recovery. On international travel, short-haul destinations like Southeast Asia, Maldives, UAE, and Nepal witness strong recovery. In the next few months, as the visa backlog gets cleared and new visa issuances for European and American destinations is streamlined, we expect to see stronger demand recovery in these long-haul destinations as well. Coming to our hotels, packages and alternative accommodation business, we witnessed a strong recovery driven by leisure travel. Supply side services have now stabilized. In the top selling hotels, 90% of the rooms are open and almost all chain hotels are now fully functioning. In many of the leisure destinations, we are now seeing growth over pre-pandemic levels, which has helped taking the overall volumes recovery in this segment to around 87% of the pre-pandemic volumes. With accommodations, our focus on building homestay supply has helped us improve supply in leisure cities such as Rishikesh, Srinagar, Shimla, Manali, Mussoorie, McLeod, Gange, and Leh, which has helped us get past pre-pandemic volumes in this category. We also launched homestay awards, which are one of its kind in the country and will help popularize this category further. The awards attracted nominations from 2,500 plus homestays across the country. Consumer voting is going on and more than 4,60,000 votes have already been cast by the users. We continue to add more properties on our platform and increase our supply mode. It is encouraging to see that more and more properties in smaller towns are keen to come on our platform and sell online. In Q1, we sold rooms in over 43,000 properties spread over 1,900 plus cities, which reflects the extensive support being provided to small accommodation service providers, particularly in the remote towns and building deeper engagement with suppliers and customers in larger Bharat. Coming to our bus ticketing business, we maintained our recovery momentum in the seasonally strong quarter. Demand and supply recovery has been lagging in southern states of Tamil Nadu, Karnataka and Kerala. In the coming quarters, reopening of offices and gradual move away from remote working in the corporate sector, especially in the IT sector, should help drive full restoration of demand. On the product side, we launched a project aimed at increasing the last-minute booking share of Redbus through targeted interventions on select routes by ensuring price competitiveness and pricing advantage with offline channels. Additionally, interventions such as keeping the booking window open at a boarding point till the actual time of departure based on real-time bias delays, as well as showing the earliest available bus at the nearest boarding points have helped improve conversion rates for us. We launched new initiatives to differentiate our Primo experience. Seven red bus lounges across top boarding points, Pan India, including four Cafe Coffee Day lounges in Bangalore are now functional. Let me now share more details on the current areas of investment which would be growth drivers in the next few years as we scale up. These include both supply-side initiatives and demand-side initiatives, apart from small and roads in adjacent markets like GCC. On the supply side, our investments are primarily towards bringing more and more small service providers and accommodations onto our platform and ground transport services like rail and intercity cabs. We now have accommodation service providers in about 1,900 cities, up from 1,600 cities earlier. We aim to have accommodation supply in over 2,000 cities before the end of this fiscal year. On airport transfer use case, we recently piloted to promote carbon-efficient services, particularly in the metro cities, starting with a partnership with BlueSmart, a ride-sharing company with electrical vehicles, offering our customers hassle-free, guaranteed, and on-time pickup and drop experience at Delhi Airport. We are looking to expand the supplier at other locations through similar partnerships. One of the key objectives around our ground transport services is to acquire customers particularly in the hinterland and eventually get them to buying other travel services on our platforms. Our key initiatives on the demand segments as shared earlier are focused on catering to the corporate travel demand via MyBiz and Quest2Travel Q2T platforms, as well as improved outreach to customers in the hinterland by tapping into the small travel agents across the country for last leg booking facilitation via our MyPartner platform and through our franchise stores. Our target is to double the booking contribution coming from these demand segments from about 7% last year to about 15% over the next few quarters. According to our estimates, we are now the largest OTA powering the travel demand from Indian corporates via our MyBiz platform, targeting with the SMEs and Q2T platform for large corporates, where we added notable clients like 3i Infotech, Grant Thornton, Gutty Logistics, etc. during the reported quarter. Coming to our foray into the GCC market, our first focus has been UAE market. and it continues to scale. Q1 has been a good quarter for us, with markets showing strong recovery post-Omicron wave and seasonal customer demand around Eid holidays. During Q1, our gross bookings grew 2.3x quarter-on-quarter, organically, albeit on a low base. We have made significant progress in building supply strength and automation. Our first target is to be the leading OTA in UAE by the end of this fiscal year. Before I wind up, I would like to reiterate that the outlook for travel industry has improved considerably and we have started the fiscal on a strong note with robust top line recovery and growth in profits. With this, let me now hand over the call to Mohit for financial highlights of the quarter. Over to you, Mohit.

Thanks, Rajesh. Hello, everyone. I hope you're all staying safe and keeping healthy. During the last two years under the pandemic, we have been focused on tight cost control to get to operational profitability while being in the business recovery phase. This year, the objective will be to improve profitability along with strong bookings growth over the previous year. Before getting into the financial highlight, I'd like to call out two specific things. One, while our operating business is largely in Indian currency, our financial reporting is in US dollars. Significant weakening of the INR versus USD during the quarter have a translation or restatement impact and hence add focus on growth in constant currency to reflect the stronger underneath growth in the operating currency. The year-on-year growth metrics during this reported quarter look very high because Q1 last year was significantly impacted by the second wave of the COVID-19 pandemic. and therefore focus on quarter-on-quarter growth to reflect the continued strong momentum in travel demand recovery. I'm glad to report that during the reported quarter, we posted very strong growth and profit numbers. We have achieved 63.3% quarter-on-quarter growth in bookings on a constant currency basis, apart from posting our highest quarterly adjusted operating profit or adjusted EBIT of $16.5 million. Adding for non-cash expenses, the adjusted cash operating profit or adjusted EBITDA stood at about $20.1 million. During the quarter, our A-ticketing adjusted margin stood at $60.6 million, registering a 38.7% growth over the previous quarter on constant currency basis. We're glad to share that our domestic flight segments have nearly recovered to pre-pandemic levels of same quarter in fiscal year 2019-20, although the recovery on international flights is still around the halfway mark for mostly the reasons that have already been called out by Rajesh. The a-ticketing margins for the quarter were on expected lines at about 6.1% in view of the high airfares And therefore, you can see that the average selling price in domestic flights was up almost 18.6% versus last quarter. And just in margin, in our hotels and packages business, we stood at $66.9 million, witnessing a growth of 62.3% quarter on quarter in constant currency terms. We witnessed a surge in bookings this quarter aided by the holidays or vacation seasonality. The margins in the segment came in line with our expectations at about 17.2%. The average selling price for domestic hotels was up almost 11.5% over the previous quarter. In our bus ticketing business, The quarterly adjusted margin stood at about $20.8 million, registering very strong quarter-on-quarter growth of about 72.3% in constant currency terms. The margins were in line with our expectations at about 8.8%, and the average selling price increase in domestic bus tickets was about 15.6% over the previous quarter. Adjusted margin in our other businesses was $7.9 million, which is a 42% quarter-on-quarter growth in cost and currency terms. Coming to our operating costs, we continue to be prudent with our variable spend, especially the customer acquisition costs. Marketing and sales promotion expenses stood at about 5.1% of gross bookings in line with the 5.1% reported during the last fiscal year. While it has been reported earlier, during the quarter, we took a majority stake in India's leading online Forex provider, BookMyForex, to help build ancillary Forex services as a part of our TripMoney fintech platform to meet the growing needs of our travel customers. As international travel picks up, this will allow us the opportunity to service the Forex requirements of our customers. We will continue to leverage our strong brands and cash position to drive investments in the areas of future growth already outlined by Rajesh. With that, I'd like to turn the call back to Vipul for Q&A.