Shares of InterGlobe Aviation surged to hit fresh high as the airlines’ growth strategy attracted investors’ confidence. The airlines expect early double-digit capex growth.
The pricing environment, fleet expansion strategies and operational efficiency have driven brokerages to take cautiously optimistic calls.
Nuvama Institutional Equities has increased the FY25-27 EPS estimates by 8-13 per cent on positive guidance. The brokerage has retained ‘hold’ call on IndiGo at a target price of ₹4,768 (factoring strong Q4FY25 amd FY26 guidance) on the back of balanced risk-reward due to premium valuations.
Motilal Oswal has reiterated neutral rating at a target price of ₹4,660. It believes IndiGo, as the market leader, is well positioned to capitalise on the growing domestic air travel trend. It is set to double by calendar year 2030, driven by rising middle class, increasing disposable income and government-led infra projects.
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Analysts’ positive guidance also leans on IndiGo plan to add more destinations across regions and take its international capacity share from 28 per cent currently to 40 per cent by FY30, plans to lower overall leasing costs and PAX growth.
The airline has been expanding its non-ticket revenue sources, including IndiGo Stretch (business class seating), BluChip (loyalty program) and a growing cargo division, aimed at increasing per-passenger revenue.
It expects international segment to be its major growth driver over FY25-30.
JM Financial, which assigned hold rating, emphasised that the guidance for revenue per available seat kilometre (RASK) moderation in 4Q FY25 is likely to pan out better than expected given higher fares during Mahakumbh and an extended wedding season leading to better Q4 numbers.
InCred Equities believes IndiGo’s expectation of 15 per cent pa rise in industry air traffic (domestic & international) over FY25-30 is optimistic. “While IndiGo has grown ahead of industry over the last decade, we expect it to grow at closer to industry rate over FY25-30,” the brokerage said.
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However, InCred has maintained a reduce rating on the stock at a target price of ₹3,030. Mentioning IndiGo hopes for a 16 per cent domestic industry traffic CAGR in FY25-30, InCred expects a lower 8-10 per cent CAGR.
Global brokerage Morgan Stanley recently added the airline operator to its India focus list. Jefferies has maintained a buy call on IndiGo at a target price of ₹5,700, nearly 10 per cent upside potential from the latest high.
However, uncertainty and unpredictability of the policy/regulatory framework, adverse taxation structure hurting profitability, economic slowdown, rising competition and higher oil prices could pose risks.
IndiGo shares traded 1.90 per cent higher at ₹5,074.95 on the NSE as at 12.40 pm. It soared 4 per cent to hit a fresh high of ₹5,190.35 in early trade, surpassing most target prices.
