Gangwal, family trust offload 5.7% stake in IndiGo for ₹11,564 crore

Over the past few years, Rakesh Gangwal and his related entities have gradually reduced their stake in IndiGo through multiple block deals

InterGlobe Aviation Ltd (IndiGo) cofounder Rakesh Gangwal and his family trust on Tuesday offloaded a 5.72 per cent stake in India’s largest airline through a block deal worth Rs 11,564 crore ($1.39 billion), according to exchange filings.

 

Gangwal and The Chinkerpoo Family Trust sold a combined 22.1 million shares at Rs 5,232.5 each in one of the largest secondary-market transactions ever executed in India. The offering was upsized from an initial 13.2 million shares amid strong investor demand, people familiar with the matter said.

 

While the identities of the buyers were not disclosed, sources indicated that the shares were picked up by a mix of domestic mutual funds and long-only foreign funds.

 

 

IndiGo shares declined nearly 2 per cent on Tuesday to close at Rs 5,313 following the sale. Prior to the transaction, Gangwal held about 13.5 per cent in the low-cost carrier. Goldman Sachs, Morgan Stanley, and JPMorgan were the investment bankers that managed the share sale.

 

The stock has surged 16.7 per cent so far this year, outpacing the 5 per cent gain in the NSE Nifty 50 index, buoyed by robust earnings momentum. IndiGo is currently trading at about 24 times its projected 12-month forward earnings.

 

“If oil prices remain at $65 per barrel, it could lead to profit before tax (PBT) being 40 per cent higher (assuming no changes to yields),” JPMorgan analysts wrote in a recent note. “This could offset the negative PBT impact from — 1. lower domestic traffic (-15 per cent), 2. longer international flights (-7 per cent), and 3. a scenario where 50 per cent of code-share revenues (2.5 per cent of total) get impacted (-20 per cent).”

 

According to Bloomberg consensus estimates, IndiGo’s stock price is expected to climb to Rs 5,936.5 over the next 12 months. A total of 19 analysts have a “buy” call on the stock and two have a “sell” call.

 

Tuesday’s stake sale is the latest in a series of divestments by Gangwal and his family. In August 2023, Gangwal and his trust offloaded a 5.83 per cent stake via block deals for about Rs 10,500 crore. Earlier, in March that year, he had sold another 6 per cent for Rs 6,786 crore. His wife Shobha Gangwal sold a 3 per cent stake for Rs 2,802 crore in August 2023, while a 4 per cent stake was sold for Rs 2,900 crore in February. In September 2022, the family had sold a 2.8 per cent stake for about Rs 2,000 crore.

 

Gangwal had resigned from IndiGo’s board on February 18, 2022, declaring he would gradually pare his holding over five years.