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IndiGo shares fall 8% after SEBI finds undisclosed related-party transactions

Credit Suisse has an 'outperform' rating on the stock but has cut earnings estimates for FY20/21/22 By 83/31/18 percent, respectively.

February 25, 2020 / 01:54 PM IST
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Shares of InterGlobe Aviation (IndiGo) fell nearly 8 percent in intraday trade on BSE on February 25 after the Securities and Exchange Board of India (SEBI) has in its preliminary enquiry (PE) found several related-party transactions (RPTs) between InterGlobe Enterprises and IndiGo that were not disclosed as per the required procedure.

"SEBI has found several related-party transactions that were not disclosed to the company’s audit committee and shareholders in their inquiry. The regulator has prepared a report, which has been sent to a committee of internal divisional chiefs for the future course of action," the source close to the development told Moneycontrol.

Meanwhile, global brokerage firm Credit Suisse cut the target price on the stock from Rs 1,850 from Rs 1,900.

Credit Suisse has an outperform rating on the stock but has cut earnings estimates for FY20/21/22 By 83/31/18 percent, respectively.

"We expect the company's earnings to revive as cost structure spike tapers off. Weak SpiceJet balance sheet and Air India divestment can be additional opportunities," Credit Suisse said.

The company reported a massive jump in its third-quarter net profit on the back of increasing load factor and higher operating income.

It posted a 167.8 percent jump in its Q3FY20 consolidated net profit at Rs 496 crore against the CNBC-TV18 estimates of Rs 175 crore.

Revenue of the company rose 25.5 percent to Rs 9,931.7 crore against Rs 7,916.2 crore, YoY.

Earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDAR) was up 17.2 percent at Rs 1,960.7 crore versus Rs 1,681.4 crore, while EBITDAR margin was down 150 bps at 19.7 percent versus 21.2 percent.

Yield for the quarter was at Rs 3.88 versus Rs 3.83 crore and load factor was up at 87.6 percent versus Rs 85.3 percent, YoY.

Around 13:50 hours, the stock was 4.75 percent down at Rs 1,375.70 on BSE.

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Moneycontrol News
first published: Feb 25, 2020 10:09 am