MakeMyTrip Stock Plummets After Short-Seller Report

MakeMyTrip’s stock experienced a significant drop, hitting its lowest point in a year, following the release of a short-seller report. The central issue revolves around how the online travel agency (OTA) defines profit, a detail that has been part of the company’s filings with the U.S. Securities and Exchange Commission (SEC) for the past four years.

At the core of the debate is the adjusted margin metric, a key indicator of profitability in the OTA sector. Investors and analysts often focus on adjusted margins rather than operating profit during earnings calls and presentations.

MakeMyTrip defines adjusted margin in its SEC filing as revenue plus customer discounts and cashbacks, minus the cost of hotel or package procurement. The inclusion of customer discounts and cashbacks in this calculation has raised concerns. These discounts, which are actual costs for MakeMyTrip, are added back into the adjusted margin, a practice considered non-standard but common in the technology and online travel industries.

In fiscal year 2025, MakeMyTrip reported $978 million in revenue but added back $302 million in discounts and cashbacks. Over four fiscal years, this add-back totals $899 million, representing customer spending excluded from revenue under International Financial Reporting Standards (IFRS) but included in the company’s primary metric.

The discrepancy between adjusted figures and IFRS results was particularly evident in the second quarter of fiscal year 2026. During this period, MakeMyTrip reported a net loss of $5.7 million under IFRS, a significant shift from the $17.9 million profit in the same period the previous year. While revenue increased by 9% year-over-year, the bottom line was negatively impacted by $35.9 million, largely due to foreign exchange losses related to the depreciation of the Indian rupee. The results also reflected accounting adjustments from a $3.1 billion capital restructuring aimed at buying back and canceling shares held by Trip Group, a Chinese investor.

Despite the reported loss, MakeMyTrip’s adjusted metric showed a $44.2 million operating profit, a 17.9% increase year-over-year. The company argues that the adjusted figure provides a more accurate picture, as the finance costs causing the IFRS loss were largely one-time events related to restructuring and currency fluctuations.

Air ticketing, MakeMyTrip’s largest segment by gross bookings, highlights the impact of the adjusted metric. In fiscal year 2023, the company reported $147.8 million in flight revenue under IFRS. After adding back $135.3 million in customer cashbacks, the adjusted margin for this segment reached $280 million.

The actual commission retained from each flight booking is approximately 4% of gross bookings, but the adjusted metric suggests a 6.4% take rate. The difference primarily consists of customer discounts and cashbacks, accounting for more than half of the actual take rate.

MakeMyTrip discloses that adjusted margin is a non-IFRS measure that may not be comparable to similar measures. However, the prominence of this metric in press releases has led to concerns that investors may receive an incomplete picture of the company’s financial health.

The short-seller Morpheus Research also alleges that MakeMyTrip has defied orders from the Competition Commission of India (CCI), manipulated its booking interface through dark patterns, and used upfront deposits to secure preferential arrangements with hotels. In 2022, the CCI fined MakeMyTrip approximately ₹223 Cr for enforcing price parity clauses that prevented hotels from offering lower prices on their own websites. Despite the pending appeal, the company is accused of continuing this practice.

These allegations could impact MakeMyTrip’s plans for an initial public offering (IPO) in the Indian market. The company’s stock dropped to $32.67 following the report, a 71% decrease from its twelve-month high.

Prior to the release of the short-seller report, MakeMyTrip announced its consideration of listing MakeMyTrip India on Indian stock exchanges, aiming to tap into domestic capital markets. The company has merged RedBus India into MakeMyTrip (India) Pvt Ltd to consolidate key brands under a single Indian entity. An India listing would also enable MakeMyTrip to use domestically traded equity for acquisitions.

In recent years, MakeMyTrip has acquired several companies, including Goibibo, redBus, Simplotel, BookMyForex, Savaari, Happay, and a stake in Atlys. In early March 2026, it acquired a majority stake in Flamingo Transworld, a regional tour operator.

The company aims to provide end-to-end services for Indian travelers, from visas to flights to hotels to tour packages. The cashback spending can be viewed as an investment in expanding its Indian user base. With nearly 100 million Indians booking through MakeMyTrip, the company’s profit metrics will soon be presented to a new audience, including Indian retail investors who may not fully understand how adjusted margin is calculated.

MakeMyTrip’s discount-led model has competitive implications for smaller OTAs like EaseMyTrip, ixigo, Yatra, and Cleartrip, which may lack the scale to sustain similar cashback programs. If MakeMyTrip reduces its spending on discounts, these rivals could gain opportunities in the market.

As MakeMyTrip prepares to present its financial story to a new set of investors, the company faces scrutiny from a short-seller, ongoing CCI proceedings, and a stock price decline. The challenge for MakeMyTrip is to clearly explain its financial metrics and address the concerns raised.