IndiGo stock falls 20%, lands in lower circuit

The stock that has gained over 50% since its listing last November fell to Rs 958

InterGlobe Aviation (IndiGo) stock plunged 20% hitting a lower circuit in an intra-day trade on Friday. While the stock has gained over 50% since its listing last November the stock fell to Rs 958 during trade on Friday.

IndiGo reported Rs 652 crore net profit in Q3 FY 16 a gain of 24% over same period last year. It also declared its higher ever quarterly pre tax profit of Rs 932 crore.

However the stock reacted negatively as the market was expecting better performance from the airline. "Increased sales and reduction in fuel costs totaling to Rs 757 crore should have reflected in higher profit. However the profit is up only Rs 126 crore on a y-o-y basis," said an analyst.

Also while in the first and third quarter of FY 16 IndiGo posted profit of Rs 640 crore and Rs 652 crore respectively its second quarter numbers were weak. In the September-end quarter the airline reported a profit of Rs 112 crore.

Despite the fuel cost advantage, the airline's expenses grew 9% because of weakening rupee, higher depreciation and fresh hiring of pilots and crew. IndiGo said it had hired extra pilots and crew in anticipation of A320neo deliveries. "This is an investment for future," Ghosh told analysts in a post results conference call.

Overall, however, the unit costs were lower by 9.8% because of fuel price benefit. Despite this, unit revenue was lower because of 14% decline in fares. The airline said it does not expect fares to go up in view of drop in aviation fuel prices.