IndiGo shares rise for third session, up 3% as operations stabilise: What lies ahead?

IndiGo shares see buying interest. 

Shares of InterGlobe Aviation, parent of IndiGo, rose for the third consecutive session on Monday as the airline’s operations showed signs of stabilising after several days of disruption.

On the National Stock Exchange, the stock climbed 2.35 percent to Rs 4,974.50 apiece. Over the past three sessions, the scrip has gained about 3 percent.

During the day, the stock touched an intraday high of Rs 5,014, up 3.16 percent.

IndiGo has been under pressure from the government and passengers after it cancelled hundreds of flights, citing changes in flight duty time limitation (FDTL) norms for pilots.

On the outlook, HSBC maintained a ‘Buy’ rating on the stock, stating that the airline’s structural growth story remains intact. However, it cut its target price to Rs 5,977 per share, indicating an upside of over 20 percent from the previous closing level.

The brokerage said the company faces strong headwinds from mass cancellations, FDTL norms and reputational damage. At the same time, it noted that IndiGo’s cost advantage and peer capacity growth suggest there is no structural damage to the business.

HSBC estimates staff costs could rise by nearly Rs 45 crore to around Rs 90 crore due to the new FDTL norms. It added that while some temporary reputational impact is expected in international markets, the effect is likely to be short-lived.

UBS also retained a ‘Buy’ call on the stock but lowered its target price to Rs 6,350 per share. The brokerage said inadequate preparation for the revised FDTL norms led to major operational disruptions.

Jefferies maintained its ‘Buy’ rating with a target price of Rs 7,025 per share. The brokerage said IndiGo has been the most impacted by the new FDTL norms, which reduce pilot duty hours and increase crew requirements. It noted that the regulatory change coincided with the airline’s capacity expansion, technical issues and congestion, leading to cascading disruptions.