MakeMyTrip Under Scrutiny: Short-Seller Report Sparks Concerns
MakeMyTrip, India’s leading online travel agency (OTA), has found itself in the spotlight following a report by short-seller Morpheus Research. The report accuses the company of inflating profits through non-standard accounting practices, sending its stock to a year-low. At the core of the controversy is MakeMyTrip’s use of the “Adjusted Margin” metric, which has been a focal point in its financial disclosures for years.
The Adjusted Margin Dilemma
MakeMyTrip’s financial reporting practices have come under scrutiny, particularly its definition of Adjusted Margin. This metric includes customer discounts and cashbacks as part of revenue, a practice common in the OTA industry but contentious among investors. In FY25, MakeMyTrip reported $978 million in revenue, with $302 million added back from discounts and cashbacks. This approach has raised questions about the transparency and accuracy of the company’s profitability claims.
The issue became more pronounced in the September 2025 quarter, where MakeMyTrip reported a $5.7 million net loss under International Financial Reporting Standards (IFRS), yet claimed a $44.2 million operating profit using its adjusted metric. Critics argue that this discrepancy obscures the true financial health of the company, especially as it prepares for a potential IPO in India.
Implications for the Indian Startup Ecosystem
The allegations against MakeMyTrip have broader implications for India’s startup ecosystem, particularly in the competitive OTA market. Smaller players like EaseMyTrip, ixigo, and Yatra may struggle to compete if MakeMyTrip’s discount-led model continues unchecked. The controversy also highlights the challenges startups face in maintaining transparency while pursuing aggressive growth strategies.
Moreover, MakeMyTrip’s ongoing issues with the Competition Commission of India (CCI) add another layer of complexity. The CCI previously fined the company for anti-competitive practices, and further scrutiny could impact its business operations and IPO plans. The outcome of these proceedings may set a precedent for other tech companies in India, influencing how they report financials and engage in market practices.
Looking Ahead
As MakeMyTrip navigates these challenges, its next steps will be closely watched by investors and industry observers. The company is exploring an India listing, which would open it to a new class of domestic investors. However, the ongoing scrutiny and potential regulatory actions may affect its valuation and investor confidence. How MakeMyTrip addresses these concerns and communicates its financial health will be crucial as it seeks to expand its presence in India’s burgeoning tech market.
