Home » Private Sector » IndiGo becomes India’s first airline to cross Rs 1 lakh crore m-cap mark; stock up 4%

Private Sector

IndiGo becomes India’s first airline to cross Rs 1 lakh crore m-cap mark; stock up 4%

IndiGo

IndiGo’s parent company, InterGlobe Aviation Ltd, became the country’s first airline with a combined market capitalisation (m-cap) of more than Rs 1 lakh crore on Wednesday. On the BSE, the company’s turnover was Rs 9.20 crore, with a market capitalization of Rs 1,01,007.56 crore. Today, the stock rose 3.55 percent to Rs 2,619.85 from its previous closure of Rs 2,529.95. So far in 2023, the stock has risen more than 28%. The share price has risen since Wadia Group-owned Go First declared bankruptcy.

IndiGo announced earlier this month a huge order for 500 Airbus Neo family aircraft, to be delivered between 2030 and 2035. The $50 billion transaction is the largest single purchase agreement in aviation history.

“Not only is this IndiGo’s largest order, but it is also the largest single aircraft purchase by any airline with Airbus.” “The engine selection for this order, as well as the exact mix of A320 and A321 aircraft, will be completed in due course,” the no-frills carrier stated.

Foreign stockbroker UBS has raised its target price for IndiGo to Rs 3,300 from Rs 2,690 before. According to UBS, IndiGo is still very well placed to deal with any downturn and can manage any major rise in crude or the US currency without significant cash burn.

IndiGo

According to UBS, the improved prognosis is supported by solid underlying demand, which lifts passenger load factors (PLF), higher yields, the suspension of Go First operations, and cheaper fuel costs due to lowering crude prices.

The overseas brokerage predicts IndiGo’s June quarter EPS (profits per share) to be Rs 82 for Q1 FY24, up 37% from the previous year’s record-high annual EPS.

It forecasted a 6% sequential increase in Q1 yields, a 7% quarter-on-quarter (QoQ) or 18% year-on-year (YoY) increase in available seat kilometres (ASK), and a PLF of 89%, meaning a 13% QoQ (32%) YoY increase in revenue passenger kilometres (RPK).

“There is still plenty of room for international travel growth, and we expect this to be a key driver of IndiGo’s future growth.” International yields remain equal to local yields, but with a superior cost structure (lower fuel taxes and better efficiency considering long rides). “We have reduced our yield estimate from Rs 5.13 in FY23 to Rs 4.65 in FY25E, and we expect ASK growth of 18% in FY24 and 15% in FY25,” UBS said.