Equirus Securities starts coverage on IndiGo with 'Long'; check target

Domestic brokerage Equirus Securities has initiated coverage on budget-carrier InterGlobe Aviation (IndiGo) with a ‘Long’ rating, citing India’s entry into a multi-decade aviation growth phase, sharp industry consolidation with IndiGo’s dominant market position, and strong earnings visibility supported by sustained capacity, traffic, and margin expansion.

 

"India’s aviation sector is entering a multi-decade growth phase, driven by favourable demographics, rising discretionary incomes, deep under-penetration, and sustained infrastructure investment. Unlike earlier upcycles constrained by policy, affordability, or capacity, this phase reflects a convergence of demand, access, and execution – marking a shift from cyclical recovery to secular compounding," the brokerage said in its note.

 

 

According to analysts, India’s airline industry is evolving into a near-monopoly with IndiGo emerging as the dominant player, commanding about 65 per cent of the domestic market.

 

Over FY25–FY30E, the brokerage expects IndiGo’s Available Seat Kilometres (ASKs) and Revenue Passenger Kilometres (RPKs) to grow at around 13 per cent compound annual growth rate (CAGR), translating into 12 per cent revenue CAGR, supported by stable load factors and modest yield softening due to a higher international mix. Its earnings before interest, tax, depreciation, amortisation, and rent (EBITDAR) is projected to grow at 10 per cent CAGR with margins sustained at 25–26 per cent, while pre-Ind AS Ebitda is expected to grow at 18 per cent CAGR.

 

Equirus has set a March 2027 target price of ₹5,659, based on a 10x multiple of March 2028 pre-Ind AS Ebitda, presenting an attractive entry point for long-term investors. The target price implies an upside potential of 20 per cent from the January 23, 2026, closing price of ₹4,704.5 on the NSE.  ALSO READ | Apex Frozen Foods zooms 19% on heavy volumes; what's driving seafood stock?

Here's why Equirus Securities is positive on IndiGo:

Operational hiccup, long-term story intact: According to Equirus Securities, the implementation of revised Flight Duty Time Limitation (FDTL) norms has acted as a short-term speed bump for IndiGo, exposing planning and execution gaps that led to temporary operational disruption, regulatory scrutiny, and one-off costs due to lower crew productivity. However, these challenges are viewed as transitional rather than structural. 

 

The brokerage noted that in a supply-constrained global aviation market, long-term outcomes are driven more by access to aircraft capacity than near-term volatility. Backed by a strong balance sheet, scale advantages, and a secured long-term fleet pipeline, IndiGo’s competitive position and market leadership remain firmly intact.

 

Overseas growth becomes a core driver: Analysts said IndiGo is entering a decisive phase of international expansion, with overseas operations shifting from a peripheral add-on to a key growth engine. The airline has consistently outperformed the market on international routes by gaining share through disciplined network selection, high-frequency deployment on major corridors, and demand creation in underserved markets, while maintaining strong load factors. "As capacity deployment increasingly skews international, IndiGo’s cost advantage and execution discipline strengthen its competitive positioning on overseas routes," it added in the note.  ALSO READ | Eternal stock extends fall, down 12% in 3 days; trades at 7-month low 

Strong runway for long-term growth: According to Equirus, IndiGo’s disciplined LCC model, 65 per cent domestic market share, low costs, strong cash generation, and secured aircraft pipeline, position it as a structural compounding story in a multi-year growth phase. A healthy balance sheet further reinforces this positioning, creating an attractive entry point for long-term investors. 

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