Motilal Oswal's research report on InterGlobe Aviation
INDIGO reported an in line adjusted loss at INR10.6b, led by better than estimated yield (at INR5.2), with an in line RPK. A lower PLF (at 79.6%), due to modest demand, has kept RASK under check (up 19% QoQ) in 1QFY23. The management said its international flight operations in 1QFY23 stood at pre-COVID levels. It expects the same to grow in coming months with the easing of international travel protocols. According to our airfare tracker, the 30-day domestic forward prices dipped sharply (down 7% MoM) in Aug’22. The 15-day domestic forward prices also dipped by 8% MoM due to additional capacity and a decline in ATF prices.Corporate travel and tourism are back to pre-COVID levels and are likely to gradually improve in coming months. The Cargo business remains strong, and the management expects it to remain stable going forward. Bangladesh and Vietnam are emerging as major cargo destinations at present, with the Chinese economy normalizing.
Despite the current state of precariousness in the industry, the stock trades above pre-COVID levels. We maintain our Neutral rating on the stock, with a TP of INR2,006, at 8x FY24E EV/EBIDTAR.
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