Ambit sees 20% upside in IndiGo stock as aviation sector gains altitude

InterGlobe aviation share price today: India's aviation sector has not been on the best ground lately, owing to sectoral headwinds and liquidity challenges resulting from the capital-intensive nature of the sector. However, with the government's rising focus on airport infrastructure, favourable demand-supply dynamics and a robust order book, the old playbook of India's aviation industry might change. Ambit has initiated coverage on InterGlobe Aviation (IndiGo) with a double-digit upside estimated and a 'Buy' rating. 

Strong upside for InterGlobe Aviation

Ambit has initiated coverage on InterGlobe Aviation with a 'Buy' rating, with the target price of ₹7,000  from the current market price (CMP) of ₹5,840. This implies a robust double-digit upside of 20 per cent. So far this calendar year, the shares of the aviation firm have experienced a strong rise of over 30 per cent. 

 

 

"Increasing codeshare agreements and a strong network put IndiGo in sweet spot to capture growing share of inbound/outbound traffic. IndiGo is strategically expanding into underserved Asian markets by launching routes to less-frequented destinations like Almaty, Baku, Tashkent, Tbilisi, Jakarta and Nairobi, aiming to capture growing demand in areas with minimal competition," the brokerage noted.

 

The airline is planning to invest heavily in aerospace parts by utilising cash effectively. On top of this, InterGlobe (IndiGo) is also making a switch from low-cost carrier (LCC) to a hybrid model by launching a premium offering on select routes. Both of these factors have prompted the brokerage firm to take a bullish outlook on IndiGo and its ability to maintain the market share.

Aviation sector outlook

 

For India's aviation sector, as a whole, data figures paint an optimistic image. Between financial year 2013-14 (FY14) and FY24, domestic passenger traffic in India grew at a compound annual growth rate (CAGR) of 9.7 per cent, outpacing international passenger traffic, which saw a 4.5 per cent CAGR. In FY24, the passenger load factor hit a decadal high of 88 per cent, surpassing pre-covid levels.

 

That apart, domestic carriers currently hold a record-high aircraft order book of over 2,000 planes, accounting for 14 per cent of the global order books of Airbus and Boeing. With the number of airports projected to rise to 300–350 by 2047, India’s aviation sector is poised for an unprecedented phase of expansion, according to the brokerage firm  Track Stock Market LIVE Updates

GIFT City to fuel growth 

Despite strong growth prospects, India’s aviation industry continues to favour the LCC model. This is mainly due to the country’s price-sensitive market. While two full-service carriers (FSCs), Kingfisher and Jet Airways, once had a presence, it’s been over a decade since they exited the market owing to intensified competition from LCCs. Meanwhile, the largest remaining FSC, Air India, has since been privatised and Vistara has now merged with it.

 

Keeping in view the high capital-intensive structure of the aviation industry, leasing becomes a key strategy for airlines. At the global front, Ireland and China are already among the leading players when it comes to aircraft leasing. As for India, the nation is building its very own leasing hub within the GIFT City International Financial Services Centre (IFSC).  

A domestic leasing ecosystem gives airlines better control over lease terms, reduces forex risk and supports growth in both aviation and MRO sectors. Also, not ignoring the job prospects. That said, the momentum is already quite visible in figures. As of January 2025, 33 lessors had registered at GIFT IFSC, enabling the lease of over 60 aircraft, including jets, helicopters and engines.

Watching the China playbook

India and China, having the tag of largest population size, are among the top domestic aviation markets in the world (just behind the US). While China's aviation industry is much larger and mature as compared to that of India, Ambit believes that India's low per capita trip rate leaves room for higher growth prospects in the sector.

 

"By accelerating infrastructure, expanding fleets, reducing costs, boosting international routes, developing talent and adopting technology, India can close the gap, potentially matching China’s passenger volume by the next decade. Sustained execution and economic growth are critical to rival China’s scale," the brokerage firm said.