Shares of MakeMyTrip
The India-centric travel portal is an unlikely slumdog millionaire. When it comes to travel portals, the darlings are either China's Ctrip.com
Web-based IPOs out of India haven't exactly been scintillating. Niche portal Rediff.com
It's a surprising void of dot-coms in India, since the country commands the world's second largest population. It's also a popular tech-savvy hub of IT outsourcing, though rampant poverty has kept India's Internet penetration rate at a pathetic 7% of the population.
Then again, it may be for these very reasons that investors see MakeMyTrip as a ground-floor opportunity. It is India's most popular online travel portal. Sure, it has posted deficits in each of the three past fiscal years, but revenue is growing quickly and the losses are -- in fact -- narrowing. Revenue surged 49% during the first quarter of fiscal 2011.
MakeMyTrip's success should open the door for more new offerings, as underwriters can now allude to the hot debut as a reason for potential investors to belly up to the bar of the next wave of debuts.
It was already a busy week for IPOs, as MakeMyTrip shared the new issue stage with RealPage
MakeMyTrip will have to earn its gains from here. Investors were already burned chasing unprofitable dot-coms a decade ago. India's online infancy is a compelling story and MakeMyTrip's pole position in online travel is a major advantage. However, its initial gains will begin to descent if the company's bottom line doesn't take off.
Buckle up those seat belts, IPO investors. It's going to be a turbulent flight.
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priceline.com is a Motley Fool Stock Advisor recommendation. Ctrip.com International is a Motley Fool Hidden Gems pick. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.
Longtime Fool contributor Rick Munarriz is a fan of new stocks, and has even recommended several fresh IPOs to Motley Fool Rule Breakers newsletter readers in the past. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy.