ICICI Securities's research report on InterGlobe Aviation
Our initial estimates factored in spread compression in FY25 vs. FY24. While, in H1FY25, this played out more than expected, there was substantial recovery in H2. This underlines our belief that a structurally lower supply industry situation in the medium term is a bigger investment thesis despite any short-term possible demand blip. The same is also ratified from a relative steady FY26 outlook shared by management despite a tough Q1, which was impacted by external challenges. Spreads get a boost from steady crude price and flattish management guidance on CASK ex-fuel. The combination of business class introduction, loyalty programme, accelerated long-haul foray with wide-body aircraft and induction of XLR underline possible new market/segment opportunities; further, highlighting that the twin strategies of internationalisation and premiumisation are firmly underway, and perhaps even picking up pace. Retain BUY. Key risks include demand decline and adverse geopolitical events.
Outlook
We maintain BUY with a revised target price of INR 6,680 (earlier INR 6,377), based on 28x FY27E EPS of INR 239 (post full tax).
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