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MakeMyTrip Won by Waiting for Indian Market

A small business' long-term strategy made for a shining IPO.

NEW YORK (TheStreet) -- Shares of Indian travel agency MakeMyTrip (MMYT) - Get MakeMyTrip Limited Report jumped nearly 90% on the company's debut last week, giving it the best performance for an initial public offering in nearly three years. While he enjoyed the jump in his company's share price, CEO Deep Kalra nonetheless says MakeMyTrip is much more than an overnight stock sensation. In his view, it's a business ready to boom now that the Indian traveler has grown more comfortable booking trips online.

Kalra spoke to


about the company's post-IPO plans and why the online Indian travel business is just getting started.

Why do you think the IPO of MakeMyTrip was so successful?


Over the course of the road show we met almost 80 different investors, perhaps more if I include the group luncheons. On the last day when we were totaling all the orders, we saw a staggering demand. Clearly people liked a couple of things about our story. I think investors liked the India story with the consuming class growing so fast. And on the other side, people liked what they saw about the company and that we would be able to maintain our leadership position as the market really opens up. I think the combination of the two clicked with the investors.

How did MakeMyTrip get started?


I was working with

GE Capital

(GE) - Get General Electric Company Report

heading up new businesses for their consumer businesses, looking at new areas for distribution including the internet. I was completely mesmerized by the medium, like a lot of us. I also believed this is the perfect platform to do your own thing, and I guess I had that entrepreneurial dream hidden in me somewhere. A clinical evaluation told me that a couple of businesses would do well, and one of them was online travel. The other was online stockbroker.

How big can this market grow to be?


The total India travel and tourism market is expected to be over $110 billion in the next 10 years. If you look at the online piece of that, the penetration is 10% right now. But today the penetration in the U.S. is about 60%. I see no reason over the next decade that over half of the $110 billion won't move online, so I think it's a pretty good market.

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When you started this business the customers were generally Americans traveling to India. Now more of your business is Indians traveling domestically. How did this switch come about?


To be candid, we were waiting for the Indian market to open up. The nonresident Indian market, or Indian folks in the U.S. coming back home, was really one part of the business plan, not the entire business plan. It would be fair to say it was like one-third of the business plan. But when we launched in India in 2000, we realized we didn't have enough people buying. We had lots of lookers but very few bookers. So we waited patiently, focused entirely on the U.S. market, built a business around this and waited for the Indian market to open up.Really it was a couple of events that convinced me that the market was ready, most notably the advent of budget carriers. That really helped us because now the content was not available to the traditional travel agents so easily, and we could use technology and pull all the content together and really solve customer problems. The second thing was that Indians had started buying online on the Indian government railway site.

Who are some of your major competitors?


We have two Indian-grown companies that are venture-funded competing with us. One is half our size and the other is about a third our size. The rest of the market, or around 10%, is comprised of


(EXPE) - Get Expedia Group Inc. Report



in India, who have been there for a couple of years, albeit keeping a low profile. And also there are a host of other smaller companies.

Now that you've gone public, what are your growth plans from here?


On the products side, we are really going to focus a lot more on the accommodations, which is hotel and packages. It's a higher-margin business. Of course, we will keep selling air tickets and bus tickets because this gets people in the door, but then we will cross-sell them hotels and packages. We also would like to expand in the region and go beyond India and look at the region, which is Southeast Asia and the Middle East, where our customers are traveling.


Reported by Gregg Greenberg in New York


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