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Geojit's research report on Inter Globe Aviation
Revenue declined by 51% YoY, but on sequential basis revenue grew by 79% QoQ, led by improvement in passenger growth. Resumption of flight operations, cost rationalization and healthy cash positions is helping the company in tiding over crisis situation. With passenger traffic gradually reaching to pre-Covid levels, revenue growth to normalize in FY22 led by better utilization of fleet and relaxation in price caps. Management focus expansion of international footprints and deeper penetration into Tier 2-3 cities, to drive growth in near future. While replacement of old aircraft with 15% more fuel efficient fleets will improve profitability in the medium term. Strong balance sheet position compare to its peers, focus on route optimization & cost rationalization and likely market share gains, we remain constructive on the stock in the long term.
Outlook
We roll forward to FY23E and value Indigo at P/E of 18x with a target price of Rs1,804 and upgrade to Buy.
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