Geojit's research report on InterGlobe Aviation
InterGlobal Aviation Ltd (Indigo) is one of the most efficient low cost carriers (LCC) with a market share of 54% in Indian aviation sector. Revenue grew by 89% YoY, was better than expected led by strong passenger growth & higher ancillary revenues. Strong EBITDA & Profitability due to strong utilization owing to recovery in passenger growth and better yields. Improved vaccination drive and decline in infections led to higher passenger load factor. Replacement of old aircraft with fuel efficient fleet is at an accelerated pace, which is expected to be completed by FY24, will bring down operating cost. Passenger traffic growth to pick-up at higher pace starting from FY23 given lower risk of infections, acceleration in vaccination and recovery in tourism & corporate travel. Capacity expansion, penetration into Tier 2-3 cities, focus on route optimization and likely market share gains post Covid era are key positives. Rise in ATF price is a key risk, but considering higher capacity utilization, cost rationalization, removal of capacity restrictions, relaxation in fare cap and healthy cash position, will limit the downside risk.
We value Indigo at P/E of 15x (7.0x EV/EBITDA) and upgrade to Buy with a target price of Rs2,188.
At 14:09 hrs Interglobe Aviation was quoting at Rs 1,863.55, down Rs 55.30, or 2.88 percent.
It has touched an intraday high of Rs 1,888.00 and an intraday low of Rs 1,841.00.
It was trading with volumes of 77,253 shares, compared to its thirty day average of 55,481 shares, an increase of 39.24 percent.
In the previous trading session, the share closed up 4.70 percent or Rs 86.10 at Rs 1,918.85.
The share touched its 52-week high Rs 2,379.00 and 52-week low Rs 1,502.90 on 16 November, 2021 and 20 April, 2021, respectively.
Currently, it is trading 21.67 percent below its 52-week high and 24 percent above its 52-week low.
Market capitalisation stands at Rs 71,782.25 crore.
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