Buy InterGlobe Aviation; target of Rs 2500: Prabhudas Lilladher

Prabhudas Lilladher's research report on InterGlobe Aviation

InterGlobe Aviation (IndiGo) reported highest-ever quarterly revenue of Rs 149bn driven by seasonality (load factor at 85% vs 79% in 2Q), better yields (Rs 5.37, +6% QoQ) and 10% QoQ increase in cargo revenue. Lower fuel CASK (at Rs 2.01 vs Rs 2.26 QoQ) and forex losses (at Rs 5.9bn vs Rs 12bn in 2Q and Rs 14bn in 3Q) led to strong operational performance - EBITDAR margin of 21.3% (in the 20% zone after 13 quarters). In Q4, IndiGo expects relatively stable fuel costs, as crude cost declined 7% in 3Q. Mgnt. guided for a 15%+ capacity addition in FY24.

Outlook

We increase our FY24/25E EBITDAR estimates by 12/17% and upgrade to ‘BUY’ from Accumulate, with a revised target price of Rs 2,500 at 7x Dec-24E EV/EBITDAR (in-line with its pre-COVID average, 8x earlier on Sep-24E).

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InterGlobe Aviation - 06 -02 - 2023 - prabhu