Shares of IndiGo operator InterGlobe Aviation soared more than 5 percent to hit a record high of Rs 3,300 on February 5 morning after the company's strong third quarter earnings triggered a flurry of upbeat views and target price updates by brokerages.
At 9.49 am, InterGlobe Aviation was trading at Rs 3,268.10 on the NSE.
IndiGo's net profit more than doubled in the December quarter to Rs 2,998 crore from the year-ago period.
The spike in profit was driven by persistent demand for air travel and a fuel surcharge introduced in October, which offset the grounding of some aircraft.
The low-cost air carrier's revenue rose 30 percent to Rs 19,452.15 crore, aided by strong demand and a favourable seasonality.
Operational performance also improved significantly on the back of stronger yields and decline in fuel costs as EBITDA margin expanded to 28.1 percent from 22.8 percent last year.
Yield for airlines refer to the average fare paid per mile, per passenger.
The company's yield per passenger rose to Rs 5.34 in the December quarter from Rs 5.38 a year ago.
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Buoyed by the company's strong performance, Nuvama Institutional Equities raised its FY25/26 EBITDA target by 12 percent/15 percent. The firm also revised its target price for the stock upwards by 30 percent to Rs 3,774 while retaining its “buy” call.
Morgan Stanley raised its price target to Rs 4,145 while retaining its “overweight” call. IndiGo's strong balancesheet and healthy vendor relationships helped it offset the adverse impact of aircraft grounding in Q3, it said.
Even though the brokerage expects earnings growth to tapering off, it said the company's competitive advantages are getting stronger.
UBS Securities also raised its target price for IndiGo to Rs 3,900 as it kept its “buy” call on the stock to factor in the strong Q3 beat across the board. The firm also said yields can continue to surprise while outlook for IndiGo remains strong.
The company also expects yields to remain strong for the next six months but Jefferies believes it can come under pressure as Air India's large fleet comes on board through the year. Jefferies has an “underperform” call on InterGlobe Aviation with a target price of Rs 2,500.
Also Read | IndiGo Q3 results: Net profit soars 111% as demand momentum continues
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