Buy InterGlobe Aviation; target of Rs 3000: ICICI Securities

ICICI Securities is bullish on InterGlobe Aviation recommended buy rating on the stock with a target price of Rs 3000 in its research report dated June 20, 2023.

Broker Research

June 20, 2023 / 13:26 IST

Buy

ICICI Securities research report on InterGlobe Aviation

InterGlobe Aviation’s (IndiGo) fleet management has been its absolute bedrock in building a successful cost-efficient airline operation. This has been further strengthened by IndiGo’s latest order of 500 Airbus A320 family aircraft placed in June’23. The key elements of IndiGo’s successful fleet strategy are: (1) Ordering well in advance to ensure continuous increase in capacity along with benefits of associated cashflow, (2) maintaining low cost structure driven by consistency of uniform and fuel-efficient fleet composition, (3) maintaining operations on single aisle aircraft fleet despite the strategy of increasing international mix to 30% over the next two years and 40% by this decade from 23% in FY23. IndiGo’s consistent approach to aircraft management has given it rich dividend by continuously being able to sustain cycles in terms of lowest cost structure and cash accretion.

Outlook

Maintain BUY on InterGlobe Aviation with an unchanged target price of Rs3,000, based on 25x FY25E EPS of Rs120. Risks include managing cost and fleet expansion in the midst of global engine crisis.

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