Accumulate InterGlobe Aviation; target of Rs 4919 Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on InterGlobe Aviation with a target price of Rs 4919 in its research report dated October 27, 2024.

Broker Research

October 28, 2024 / 14:56 IST

Accumulate

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on InterGlobe Aviation

We cut our PAT estimates by ~2-16% over FY25E-FY27E given the ongoing cost challenges. IndiGo reported weaker-than-expected performance with FXadjusted loss of Rs7.5bn (PLe Rs1.3bn) led by higher fuel cost and escalating AoG issue. Fuel CASK was up 4.2% YoY to Rs1.7, despite decline in ATF prices, due to 1) rise in VAT rates in a few states, 2) induction of less-fuel-efficient aircrafts via damp leases and 3) congestion issues. In addition, as AoG stood at mid-70s, damp leases were taken to plug in the capacity gap, leading to a rise in rental cost. Nonetheless, AoG problem has peaked and groundings would reduce to ~40 at the start of FY26E. While the cost structure problem will get resolved soon with the reduction in AoG, early signs of pricing pressure are visible as passenger RASK is likely to witness a correction by early to mid-single digit in 3QFY25E. Nonetheless, we do not foresee a major correction in yields, despite easing capacity constraints and rising competitive intensity given the market leadership position of IndiGo.

Outlook

We expect yields of Rs5.1/Rs5/Rs5 in FY25E/FY26E/FY27E. Retain ‘ACCUMULATE’ with a TP of Rs4,919 (earlier Rs5,177) by assigning a multiple of 10x (no change) to FY26E EBITDA.

For all recommendations report, click here