Indian travel site jumps 89% in IPO

chart_ws_stock_makemytripltd.top.png By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- Shares of MakeMyTrip Ltd. soared 89% on Thursday as the Indian travel agency made its debut on the U.S. market, in another sign of strength for online travel booking services.

The company, based in New Delhi and New York, provides airline, hotel and train bookings through its Web site, MakeMyTrip.com. In its initial public offering, the company offered 5 million ordinary shares priced at $14 a share.

Despite a sell-off in the broader market, shares of MakeMyTrip (MMYT) were up $12.45 to close at $26.45 on the Nasdaq.

Deep Kalra, who founded MakeMyTrip in 2000, said in an interview that he was pleased with the market's reaction, adding that he is focused on using the proceeds to help grow the company. "It's a good milestone but only the beginning of a long journey," he said.

The IPO, which is on track to be one of the strongest this year, comes on the heels of better-than-expected quarterly results from rival travel Web site Priceline (PCLN).

Last week, Priceline said profits in the second quarter jumped 16% driven by higher travel demand and improving room rates. International travel bookings increased by 59% compared to the year-ago quarter, while domestic bookings were up 20%, the company said.

In addition, Moody's Investors Service said recently that it is considering upgrading the credit ratings of online travel company Expedia (EXPE), thanks to forecasts for growth in the travel industry and Expedia's strong financial results during the recession.

While overall retail sales have been slowing recently, especially on discretionary purchases, the travel sector is one area that is attracting consumer dollars, according to a report from MasterCard Advisors' SpendingPulse data service.

A recent SpendingPulse report showed that spending on airlines, hotels and rental cars increased in July from a year ago, when the summer travel season was dominated by staycations.

However, some analysts were skeptical that the surge of interest in MakeMyTrip can be sustained.

Bill Buhr, IPO strategist at Morningstar, said the company has "open-ended growth potential" given its exposure to India's rapidly expanding middle class. But, he warned, it is entering a crowded field and "lacks any sustainable competitive advantage."

"In all, the numerous risks and uncertainties would lead us to pass on booking an investment in MakeMyTrip," he said.

-- Staff reporters Annalyn Censky and Hibah Yousuf contributed to this report.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,098.45 18.88 0.11%
Nasdaq 4,580.27 22.58 0.50%
S&P 500 2,003.37 6.63 0.33%
Treasuries 2.34 0.01 0.39%
Data as of 1:03am ET
Company Price Change % Change
Bank of America Corp... 16.09 0.08 0.50%
Apple Inc 102.50 0.25 0.24%
Intel Corp 34.92 0.27 0.78%
Facebook Inc 74.82 0.96 1.31%
General Electric Co 25.98 -0.03 -0.12%
Data as of Aug 29

Sections

The deal would value Vice at $2.5 billion. The online media company would also create content for the cable network, delivering a wider audience. More

Gas prices are falling to nearly $3 a gallon in some parts of South Carolina, and that will soon be common in much of the country. More

Netflix told the FCC that its speed on the Comcast network became so slow that customers began dropping their service. More

The Coolest Cooler is the most successful Kickstarter campaign in the site's history, raising $13.3 million from over 62,000 backers. More

Five CNNMoney readers share stories about saving that you can learn from: What they would do differently if they had another chance. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.