Geojit cuts IndiGo target on regulatory scrutiny, competition pressure

Despite the airline's operational stability recovering to over 91 per cent, these factors are expected to constrain its short-term performance, said Geojit

Geojit Investments has reduced its target price for InterGlobe Aviation (IndiGo) to ₹5,830 per share from its previous ₹6,720, while maintaining a ‘Buy’ rating. The brokerage identifies several near-term challenges for IndiGo, including increased regulatory scrutiny, competitive reallocation of flight slots, and difficulties in pilot recruitment.

 

Despite the airline’s operational stability recovering to over 91 per cent, these factors are expected to constrain its short-term performance. Geojit further notes that the Directorate General of Civil Aviation’s (DGCA) 10 per cent flight reduction could diminish IndiGo’s market share as competitors fill the vacated slots, thereby impacting growth and pricing power.

 

IndiGo, recognised as one of India’s most efficient low-cost carriers, currently holds a 64 per cent market share in the Indian aviation sector. The airline plans to hire 158 pilots by February and an additional 742 by the end of 2026, a move that analysts suggest could drive up hiring costs due to intense industry competition. 

 

Although management has revised its Q3 capacity growth guidance to high single digits for the peak season, Geojit anticipates that near-term flight cancellations and elevated cost pressures will negatively affect FY26 earnings. IndiGo is also expected to face heightened regulatory oversight and stricter compliance requirements, as the government aims to foster greater competition and ensure operational stability. 

 

Consequently, Geojit has downgraded its FY27E and FY28E earnings estimates by 43.1 percent and 10 percent, respectively, to account for the impact of the 10 percent schedule cut, rising costs, and increased competition. However, the brokerage maintains a positive long-term outlook, citing IndiGo’s inherent structural advantages, such as its cost leadership, robust fleet pipeline, and significant scale.

 

This adjustment in Geojit’s assessment follows a period of mass flight cancellations by IndiGo, which caused considerable passenger disruption. A parliamentary panel, investigating the recent air traffic issues, questioned senior aviation officials and IndiGo’s Chief Operating Officer, Isidro Porqueras, on December 17, 2025, regarding the cancellations. Reports indicate that the committee found the responses from both the airline and the DGCA to be ‘evasive and unconvincing’.

 

The Parliamentary Standing Committee on Transport, Tourism and Culture, led by JD(U) leader Sanjay Jha, has deferred its conclusions, opting to await the Civil Aviation Ministry’s ongoing inquiry report before assigning blame for the widespread operational disruptions. The ministry’s four-member committee is expected to submit its findings by December 28.   

 

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