IndiGo stock hits all-time high; surges 12% in 1-month on healthy outlook

Shares of InterGlobe Aviation, which operates IndiGo airline, hit an all-time high of ₹5,199.50, gaining 4 per cent on the BSE during Tuesday’s intra-day trade on a healthy outlook.

 

The stock ended the day with gains of 3.4 per cent and closed at ₹5,157. 

 

During the past one month, stock of the country’s largest airline company rallied 12 per cent on expectations of a strong passenger growth outlook in the January-March 2025 quarter (Q4FY25) and falling crude oil prices.

 

In comparison, the BSE Sensex was up 0.7 per cent during the same period.

 

Analysts led by Ansuman Deb of ICICI Securities expect IndiGo to benefit from a better-than-expected combination of fares, crude oil and passenger load factor to post a strong Q4FY25 net profit of ₹2,300 crore.

 

This should help boost profit before tax excluding forex for FY25 to hit ₹8,600 crore. 

 

The brokerage has been structurally positive on IndiGo driven by business moats of cost competitiveness, robust orderbook and strong balance sheet.

 

Profitability, too, has been strong, aided by a favourable supply-demand situation which should continue in FY26. 

 

Emkay Research — in its Q4 preview — believes that IndiGo will deliver steady results and there would be no forex hit to its financials in the quarter.

 

The brokerage expects load factor to improve by 70 basis points (bps) year-on-year (Y-o-Y) to 87 per cent and capacity/revenue to rise by 20 and 21 per cent, respectively, over the year-ago quarter.

 

The rupee closed slightly stronger versus the dollar, implying no forex losses and slight gains for IndiGo, said Sabri Hazarika and Arya Patel of the brokerage. 

 

In Q3FY25, earnings before interest, taxes, depreciation and amortisation (Ebitda) was flat due to higher forex loss on account of rupee depreciation, higher lease expenses and costs due to grounding of aircraft and airport fees.

 

Q3 revenues, however, came in better than expected at 14 per cent Y-o-Y, led by a 13 per cent rise in passenger volumes.

 

The company touched new milestones — operated a peak of 2,200 daily flights and served a record 31.1 million passengers during the quarter. 

 

The management expects this robust demand growth to continue in the coming quarters.

 

Expansion of cargo operations, too, is expected to support ancillary revenue.

 

The management guided to a healthy demand outlook with Indigo beating sector estimates with Q4 available seat per kilometre (ASK) growth of 20 per cent Y-o-Y (on a low base, though).

 

In addition to the domestic market, international expansion and premiumisation are additional tailwinds.

 

Kotak Research, in a report last month, pointed out that International long-haul is a large, unaddressed market for Indigo and can yield meaningful gains over time. 

 

Analysts led by Aditya Mongia of the brokerage believe that the airline has several aces up its sleeve — experience gained through codeshares, impending aircraft additions beyond regular narrow-bodied and strength of a domestic network to pool volumes.

 

The brokerage has increased its valuation multiple to 22 times (from 21 times), factoring in a 10 per cent upside to FY27 earnings (versus 5 per cent earlier) coming from long-haul international travel.

   

IndiGo is one of the most efficient low-cost carriers with a market share of 62 per cent in the Indian aviation sector. It is among the fastest growing low-cost carriers in the world. It had a fleet of 437 aircraft and provided scheduled services to 89 domestic and 34 international destinations as of December 31, 2024.