Indigo shares gain over 1% after Q3 results surpass brokerage estimates

Interglobe Aviation Ltd shares gained close to a percent on Monday, January 27, after its Q3 FY2025 results surpassed estimates of various brokerage reports.

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Interglobe Aviation Ltd shares gained over 1 percent on Monday, January 27, after its Q3 FY2025 results surpassed estimates of various brokerages.

Indigo shares are currently trading at Rs 4,206.90, implying a rise of 1.08 percent from the previous closing level.

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Indigo reported an 18 percent year-on-year decline in its December quarter consolidated net profit at Rs 2,449 crore. Revenue from operations rose 14 percent year-on-year to Rs 22,111 crore. EBITDA rose 0.7 percent year-on-year to Rs 5,178.6 crore, with an EBITDA margin of 23.4 percent, slightly lower than the previous year's 26 percent.

IndiGo CFO Gaurav Negi said that the airline maintains capacity growth guidance of double-digit growth in FY25, when compared to FY24.

Nuvama Institutional Equities reported that Indigo's Q3 EBITDAR beat their estimate, driven by better yields and higher RPKM. However, they highlighted a challenging near-term outlook due to capacity growth outpacing demand. Nuvama revised its EPS estimates and maintained a 'HOLD' rating with a target price of Rs 4,459.

InCred raised its FY26F PAT estimate for the stock and rolled forward its valuation. They maintained a 'REDUCE' rating with a new target price of Rs3,030.

Emkay valued Indigo at a P/E-based TP of Rs5,300. They noted that PBT before exceptional items and forex is marginally changed. Key risks identified by Emkay include currency, fuel prices, and economic slowdown.

Motilal Oswal AMC cut its EPS estimates for FY25/FY26. They reiterated a 'Neutral' rating with a TP of INR4,535.

Since January 2022, IndiGo’s stock price has rallied ~106 percent, resulting in valuations trading
at a hefty premium to global LCCs and other aviation peers. Furthermore, IndiGo
has been the best performing stock of a major airline in the world since January
2019. Currently, on FY26E EV/EBITDAR, IndiGo is trading at a premium of
37 percent/92 percent/44 percent to its major US/European/APAC peers.

The Budget 2025 is being keenly watched out for sectoral opportunities, led by strategic investments, policy reforms and incentives for domestic manufacturing. Focus areas include modernizing airport infrastructure, enhancing regional connectivity, and integrating advanced technologies. Additionally, including Aviation Turbine Fuel under GST could lower operational costs and airfares, while boosting local manufacturing and MRO services could save costs and create jobs.

In a near-term outlook, the aviation sector is already capitalising with surge in prices for tickets to Mahakumbh as the celebration continues to garner peak-level visits this time of the year.

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