InterGlobe Aviation should be core holding for any India portfolio, says Emkay Global

The Indian aviation sector is poised for growth, said Emkay.

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26 Aug, 2025 12:21

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Domestic brokerage Emkay Global sees significant rerating potential in low-cost carrier InterGlobe Aviation shares, "which should be the icing on its 20 percent earnings CAGR."

The company is a dominant player in the aviation space, with a long sector-growth runway ahead, said the brokerage. It added, "We reckon its competitive position will remain steadfast for at least the coming 3-5 years. Indigo has emerged as a player with strong profitability, with cash flows largely keeping up the pace."

"We think Indigo is a quintessential play on Indian consumption and should be a core holding for any India portfolio," the broking firm said.

The broking house sees three catalysts for Indigo in the medium-term.

1. The two new airports, at Navi Mumbai and Jewar, should be fully operational by CY26 and would hence add significant volume for Indigo. The company’s dominant market share and ability to add new aircraft at short notice places it in pole position to secure 60-70 percent of the incremental domestic traffic.
2. Emkay Global expects a revival in discretionary spending in 2HFY26. This could drive improved utilization in H2FY26 and presents a potential upside to the consensus forecasts.
3. Soft crude prices through FY26 which are not yet priced in. The recent uptick in the stock price merely factors in the Iran-Israel ceasefire, albeit not the subsequent weakening in crude prices.

Further, the domestic aviation sector is poised for growth, as the country's per-capita income climbs from $2,711 in 2024 to approximately $4,000 by 2030. "This demand explosion would be aided by a significant expansion in airport capacity – with plans of opening 50 new airports over the next 5 years."

Further, the international segment may also rise, with Indigo emerging as a significant player with a wide-body order book of 60 aircraft and over 30 wide-bodies being added in the next 5 years. As more bilaterals open up from India, in line with airport capacity, Emkay sees Indigo capturing a large part of the incremental market.