GoFirst insolvency, high fares to drive IndiGo's turnaround in Q1: Analysts

IndiGo Q1 preview: Besides these two factors, analysts believe, strong passenger traffic growth, coupled with high airfares, would also support the Q1FY24 earnings

IndiGo Q1FY24 results preview: The absence of Go First, and weak operations of SpiceJet may help InterGlobe Aviation-owned IndiGo to post a turnaround performance in the April-June quarter (Q1) of financial year 2023-24 (FY24) when it announces its June quarter result on Wednesday, August 2.

On average, analysts expect the airline to post a net profit of Rs 1,958.8 crore in the recently concluded quarter as compared to net loss of Rs 1,064.2 crore YoY, and profit of Rs 919.8 crore QoQ.

Besides these two factors, analysts believe, strong passenger traffic growth, coupled with high airfares, would also support the Q1FY24 earnings.

Meanwhile, at the bourses, shares of the low-cost carrier have soared 30.3 per cent on the BSE, so far this calendar year, as against 8.7 per cent gain in the benchmark S&P BSE Sensex. The stock hit a record high of Rs 2,746 on July 13, 2023.

Here's what key brokerages expect from IndiGo's Q1FY24 results:

Kotak Institutional Equities

The brokerage expects IndiGo to report net sales of Rs 16,742.5 crore, up 30 per cent year-on-year (YoY) from Rs 12,855.3 crore reported in the corresponding quarter of the previous fiscal (Q1FY23).

On a sequential basis, sales may rise 18.2 per cent from Rs 14,160.6 crore seen at the end of the March quarter of FY23 (Q4FY23).

"We expect a 40 per cent/16 per cent YoY/QoQ increase in passenger count, largely driven by higher available seat kilometer (ASK), and higher load factor at 9 per cent. We build a 5 per cent QoQ increase in yields while lowering support of other operating income (payment for grounded planes)," the brokerage said.

It expects revenue per available seat kilometer (RASK) less cost for available seat kilometres (CASK) (excludes other income) at Rs 0.76 per ASK, at the higher end of the historical annual range.

Given this, Ebitda (earnings before interest, tax, depreciation, and amortisation) is pegged at Rs 4,957.2 crore, up from Rs 598.7 crore YoY and 2,751.7 crore QoQ.

Ebitda margin, too, is seen expanding from 4.7 per cent YoY and 19.4 per cent QoQ to 29.6 per cent in Q1FY24.

Nuvama Institutional Equities

It expects Ebitdar (earnings before interest, tax, depreciation, amortisation, and rent) to grow 4x YoY to Rs 3,607.5 crore led by strong passenger traffic growth, coupled with higher yield, due to limited available capacity (large number of fleet grounded due to supply chain issues).

Ebitdar was Rs 716.9 crore in Q1FY23 and Rs 2,966.5 crore in Q4FY23.

Passenger load factors (PLFs) are expected to increase by 700bps YoY to 87 per cent. Fuel CASK is expected to decline by 30 per cent to 1.71 led by ease in crude oil prices (down 30 per cent YoY), it said.

PAT is projected at Rs 1,130.8 crore, while revenue is seen at Rs 15,666.2 crore.

Prabhudas Lilladher

The brokerage expects IndiGo to report a strong quarter with load factor of 88 per cent, and yield of Rs 4.86 led by strong demand and bankruptcy of Go First.

Consequent to a 15 per cent decline in aviation turbine fuel (ATF) prices on sequential basis, we expect gross margin (GM) of Rs 3.1 (RASK less fuel CASK).

Revenue is pegged at Rs 15,333.7 crore, Ebitda at Rs 3,884.9 crore, and PAT at Rs 1,759.3 crore.