InterGlobe Aviation nears record high; stock surges 20% in one month

IndiGo remains well placed to benefit from strong systemic demand and its leading competitive positioning, analysts said

Shares of InterGlobe Aviation, which runs the country's largest airline IndiGo, hit a fresh 52-week high of Rs 2,247, up 1 per cent on the BSE in Thursday's intra-day trade. In the past seven trading days, the stock has rallied 9 per cent after Go First filed for bankruptcy. The stock price of IndiGo was trading close to its record high level of Rs 2,379, touched on November 16, 2021.

In the past one month, the stock has outperformed the market by surging 20 per cent, as compared to 3 per cent rise in the S&P BSE Sensex.

On significant increase in volume of the company’s securities, IndiGo, last week, clarified that there is no such recent event/information etc. including any unpublished price sensitive information, which was reasonably required to be furnished to the stock exchanges.

However, the recent events in the aviation industry may have impacted the volume of trading in the company’s securities, the company said.

Go First commanded a market share of 8.9 per cent in CY22 and a sudden disruption in operations is likely to benefit other players and raise airfares due to supply constraints, said Jinesh Joshi – Research Analyst, Prabhudas Lilladher.

Meanwhile, IndiGo's earning could be healthy in Q4FY23, despite the usual normalization, post a seasonally strong Q3, according to analysts.

"IndiGo would report steady earnings, despite seasonal weakness. We estimate yields to decline by 12 per cent QoQ to Rs 4.73, partly offset by an 8 per cent decline in fuel cost/ASK (available seat per kilometer) ; PLFs should be strong at ~85 per cent. We estimate PBT/ASK at Rs 0.40 and profit after tax at Rs 1,170 crore for Q4FY23, down 18 down. We build-in Rs 240 crore forex gains but higher non fuel cost of available seat kilometer (CASK) QoQ," Emkay Global Financial Services said.

According to analysts at ICICI Securities, IndiGo remains well placed to benefit from strong systemic demand and its leading competitive positioning. IndiGo remains focused on growth (>15 per cent ASK growth in FY24, doubling the fleet by 2030) and internationalization (increase ASK mix to 30 per cent over next two years from 23 per cent in 9MFY23). These goals are intended to be achieved within the already existing business framework (low cost, hassle-free service, on-time operations with uniform fleet), the brokerage firm said in a note with ‘buy’ rating and a target price of Rs 2,415.

Meanwhile, in March, rating agency ICRA upgraded the outlook on lnterGlobe Aviation from 'Negative' to 'Stable' while reaffirming the company's long-term credit rating and short-term credit rating.

The change in outlook factors in the improvement in operating environment aided by a healthy improvement in passenger volumes (both domestic and international), moderation in aviation turbine fuel prices over the past few months and further improvement in liquidity position, ICRA said.