IndiGo: Promoter stake sale a non-event; analysts see up to 15% upside

Technical charts suggest that the stock is displaying a firm trend, and trading above its key moving averages.

Shares of InterGlobe Aviation (IndiGo) rallied up to 4 per cent on Monday owing to block deals at the counter as the company's co-founder exited partial stake. The stock has gained 10 per cent so far this year, as against a near 3 per cent gain on the NSE benchmark Nifty 50 index.

On Monday, Rakesh Gangwal, co-founder of IndiGo, divested 6 per cent stake in the airline firm via bulk deals. He sold 23 million shares at Rs 3,016 each, amounting to Rs 6,786 crore.

As per the exchange data, Morgan Stanley Asia was one of the buyers, having bought 2.1 million equity shares stake at Rs 633 crore.

Experts recommend that promoter stake sale to be a non-event, as IndiGo is a professional managed company, and stake sale by the promoter does not have any bearings on the company's financials.

Kranthi Bathini, Director-Equity, WealthMills Securities believes that given the future prospects for aviation growth in India, IndiGo seems to be favourably placed based on its business model, as the airline shall be able to maintain its market share.

Going ahead, the upcoming summer holidays and the stable fuel prices augur well for the airline company.

Sharing an optimistic view, Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas believes that the recent upmove in the IndiGo stock suggests start of the next leg of upmove, wherein the stock could potentially target Rs 3,500 – Rs 3,684 on its way up, derived at using Fibonacci extension method. This implies an upside of up to 13 per cent at the upper end of the anticipated price target from present levels.

"The upmove has been accompanied with above average volume indicating bullish sentiment. Overall, the medium term uptrend is intact and the positive momentum may continue. Structure can become weak incase the stock dips below Rs 3,020.” Jatin added.

Here's how the stock is placed on the charts.

IndiGo is presently seen firmly trading above its key moving averages. The price-to-moving averages action is clearly bullish, with the shorter-term moving averages comfortably above the longer-term moving averages.

The 20-DMA (Daily Moving Average) of the stock stands at Rs 3,135, while the 50-DMA is at Rs 3,070. Similarly, the 100- and 200-DMAs stand at Rs 2,883 and Rs 2,693, respectively. CLICK HERE FOR THE CHART

The weekly chart shows that the stock has rallied over 31 per cent post its breakout above the 20-WMA (Weekly Moving Average) in November 2023. The 20-WMA presently stands at Rs 2,925, and is expected to act as a strong support.