Interglobe Aviation outlook: Near-term consolidation likely, long-term investors advised to hold

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Shares of Interglobe Aviation, the parent company of IndiGo, are expected to consolidate in the near term due to recent guidance cuts and operational disruptions, but long-term growth drivers remain intact. Speaking with CNBC TV18, Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services, advised that while short-term investors might consider other opportunities, those with a long-term horizon should continue to hold the stock.

Highlighting the current challenges, Khemka pointed to the management's decision to cut guidance for the third quarter. "There is definitely a guidance cut for Q3 by the management," he noted. This, combined with ongoing uncertainty and disruptions, is expected to exert pressure on the stock's performance in the immediate future. "What we see is that definitely in the near term because of the uncertainty and the disruptions, there could be a pressure which some of which is already in the price. So we are expecting the stock to consolidate for the near term," he explained.

Despite the near-term headwinds, the long-term outlook for the airline remains positive. The key growth triggers for Interglobe Aviation include its large fleet size addition planned over the next few years, strategic expansion into global markets, and its dominant market leadership position. Based on these factors, the advice for existing long-term investors is to weather the current volatility and hold their positions.

However, for those considering a fresh entry into the stock, a cautious approach is recommended. Khemka advised waiting for the company's third-quarter results before making new investments. This would provide greater clarity on the financial impact of recent challenges, including potential additional cost pressures stemming from government directives on remuneration for affected passengers. "We would wait for Q3 numbers where the pressure is taken off… once that is clear, there will be more clarity on the growth ahead," he concluded.