After a surprise profit in Q3, IndiGo may report net loss in Q4: Analysts

IndiGo Q4 preview: Analysts expect the airline to bleed this quarter yet again amid high fuel costs

IndiGo Q4 preview: InterGlobe Aviation, the parent company of low-cost carrier IndiGo airlines, is set to report its March quarter result on May 25. However, after reporting a surprise net profit of Rs 129.8 crore in the previous quarter (Q3FY22), analysts expect the airline to bleed this quarter yet again amid high fuel costs.
 

According to brokerages, sharp improvement in yields, passenger levels, and load factor could support earnings before interest, tax, depreciation, and amortization (Ebitda) recovery sequentially but base lease rentals and supplementary rentals, along with sharp uptick in aviation turbine fuel (ATF) remain large cost items.

Here's what key brokerages expect:

JPMorgan

The global brokerage expects IndiGo’s revenue to fall about 9 per cent sequentially to Rs 8,493.6 crore, but grow 36.5 per cent year-on-year (YoY). Ebitda, meanwhile, is seen shrinking a massive 71 per cent QoQ and 7 per cent YoY to Rs 509.6 crore.

Revenue was Rs 6,223 crore in Q4FY21 and Rs 9,294.8 crore in Q3FY22. Ebitda, on the other hand, was Rs 549.5 crore in Q4FY21 and Rs 1,783.2 crore in Q3FY22. 

It pegs net loss for the quarter at Rs 1,119.9 crore, up from a loss of Rs 1,159 crore reported in the year-ago period. 

Edelweiss Securities

Analysts here, too, expect the airline to incur loss in the last quarter of FY22. The quantum, however, is lesser than JPMorgan’s at Rs 162.4 crore. It sees revenue at Rs 9,130.1 crore, up 47 per cent YoY but down 4 per cent QoQ, while Ebitdar (earnings before interest, tax, depreciation, amortization, and rent) is seen at Rs 1,378.7 crore, up 113 per cent YoY from Rs 648.3 crore, but down 31 per cent sequentially from Rs 1,995.5 crore.
 

"While we expect muted passenger load factor (PLF) in Q4 with subdued air traffic in domectic flights, worst is behind and there shall be a good recovery from FY23," the brokerage said.

ICICI Securities

According to the brokerage, Gross spread (RASK - fuel per ASK) for IndiGo stood at Rs 2.7 in Q3FY22 (five-quarter high). To be able to maintain the same spread in Q4FY22, there needs to be 6-7 per cent QoQ growth in RASK (revenue available per seat kilometer), as per their estimates.
 

The brokerage pegs RASK at Rs 4.21 for Q4FY22 and fuel-CASK (cost available per seat kilometer) at Rs 1.7. Moreover, it estimates PLF at 80 per cent, up from 70.3 per cent in Q4 of FY21, and 79.6 per cent in Q3FY22.

Overall, revenue is seen at Rs 7,872 crore, and net loss is seen at Rs 748.9 crore. 

Kotak Institutional Equities

It expects only a modest decline in revenues on a sequential basis as the decline in passenger levels may get compensated by sharp increase in overall yields for the company. Thus, it pegs revenue at Rs 9,234.8 crore, up 48.4 per cent YoY and down just 0.6 per cent QoQ.

Moreover, it sees Ebitda recovery of 9 per cent QoQ and 253 per cent YoY, at Rs 1,939.7 crore, despite a 15 per cent sequential increase in ATF prices. Improvement in Ebitda, it said, will drive a sharp QoQ improvement in net profit during Q4FY22. It pegs net profit at Rs 180.2 crore. 

It assumes IndiGo's market share at around 53 per cent during the quarter and sees Ebitda margin improving 1,127 bps YoY and 181 bps QoQ at 21 per cent.