A tablet displaying the MakeMyTrip logo on a table covered with financial documents at night.
Online travel aggregator MakeMyTrip (NASDAQ: MMYT) is facing accusations from activist short-seller Morpheus Research, alleging anti-competitive practices and the use of aggressive accounting methods to inflate profits. The report, based on conversations with over 100 industry insiders, including former employees and hotel chain managers, has raised concerns about the company’s business conduct and financial reporting.
Morpheus Research, which holds short positions in MakeMyTrip, alleges that the company continues to engage in practices that restrict competition, despite a previous penalty from the Competition Commission of India (CCI) in 2022. The CCI had fined MakeMyTrip for imposing price parity on hotel partners, a practice the regulator ordered the OTA to cease. However, Morpheus claims that MakeMyTrip continues these practices, with daily price parity checks and penalties for hotels listing cheaper prices elsewhere.
The report further alleges that MakeMyTrip removes hotels from its search results if they offer lower prices on other platforms or refuse exclusive deals. Morpheus also claims to have found evidence of a new, undisclosed CCI investigation into MakeMyTrip’s pricing agreements, suggesting possible cartel-like behavior.
In addition to the anti-competitive practice allegations, Morpheus accuses MakeMyTrip of using aggressive accounting methods to inflate its profits. One specific claim is that MakeMyTrip has not set aside sufficient funds to cover a potential negative outcome in its petition against the 2022 CCI penalty, which could amount to $34 million, including interest. The report also points out that MakeMyTrip still has a $20 million receivable from the defunct Go First airline and has only provisioned half of it, while competitors have written off their exposure entirely.
Morpheus also criticizes MakeMyTrip for reporting “adjusted” metrics that inflate its results compared to IFRS figures. The company’s use of an “adjusted margin” metric, which adds back customer acquisition costs, makes its air ticketing segment appear to be growing, despite a 2% revenue decline under standard accounting rules. According to the report, the gap between MakeMyTrip’s adjusted profits and its actual reported profits has been $212 million since 2021.
The report also highlights increasing competition from Booking.com and its subsidiary Agoda, which have been aggressively cutting prices to gain market share in India. MakeMyTrip’s share of bookings at Marriott hotels in India has reportedly fallen from 38% in 2022 to 31% today, while Booking.com’s market share has increased to 36-38%.
MakeMyTrip declined to comment on the allegations, stating that it does not respond to short-seller reports.
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