Should you buy, hold or sell InterGlobe Aviation after Q1 numbers

New Delhi: Brokerage firms remain mixed over India’s largest airline carriage (IndiGo) after its Q1 numbers, which were majorly better than Street expectations.

InterGlobe Aviation, which runs airline IndiGo, reported losses of Rs 1,064.30 crore in the June quarter compared with a loss of Rs 1,681.80 crore in the March quarter and Rs 3,174.20 crore in the year-ago quarter.

Revenues from operations surged 327.50 per cent year-on-year (YoY) to Rs 12,855.30 crore compared with Rs 3,006.90 crore in the year-ago quarter. Total income of Rs 13,018.80 crore for the quarter was the highest ever, the company said.

JPMorgan maintained its overweight rating on Indigo with a target price of Rs 2,200 which translates into an upside of over 11 per cent from Rs 1,975 recorded on August 3, 2022.

“Q1 delivered a revenue beat. The pricing tailwind is likely to aid profit turnaround in H2. While Q2 is likely to see a seasonal dip,” said the global brokerage firm.

Free cash and gross debt grew 12 per cent and 24 per cent YoY to Rs 19,100 and Rs 39,300 crore, respectively, said

, which believes cost rationalisation will continue and PLF will improve on capacity addition. However, it sees ATF prices and seasonal weak quarters as the biggest negative for the company.

“Indigo is a proxy for a re-opening trade led by pent-up PAX demand in the near term. In the long term, XLRR fleet-adds and improved cargo business shall raise competitiveness,” it added with a buy tag and a target price of Rs 2,446.

InterGlobe had a total cash balance of Rs 19,069.40 crore comprising Rs 8,303.70 crore of free cash and Rs 10,765.70 crore of restricted cash. It added a net six aircraft during the quarter, with the total fleet as of June 30 composed of 281 aircrafts.

“We expect the international market to grow faster than the domestic market for IndiGo. The same will touch 40 per cent of its total share over the next five years,” said

, with a neutral rating on the stock and a target price of Rs 2,006.

Despite the near-term challenges, IndiGo will take additional pre-emptive measures, it added. “However, the resurgence of airlines, the upcoming Akasa Air, and the established

will reduce IndiGo’s market share going forward.”

Prabhudal Lilladher has a hold rating on the stock with a target price of Rs 1,900 as it believes that macros would impact the profitability, while higher crude and rupee depreciation will further hit margins in the weaker Q2.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)


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