NEW YORK ( TheStreet) -- MakeMyTrip (Nasdaq: MMYT) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall. Highlights from the ratings report include:
- MMYT's very impressive revenue growth greatly exceeded the industry average of 48.5%. Since the same quarter one year prior, revenues leaped by 83.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- MMYT's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- In comparison to the other companies in the Internet & Catalog Retail industry and the overall market, MAKEMYTRIP LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- After a year of stock price fluctuations, the net result is that MMYT's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The gross profit margin for MAKEMYTRIP LTD is currently extremely low, coming in at 3.60%. Regardless of MMYT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.20% trails the industry average.