Accumulate InterGlobe Aviation; target of Rs 3961: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on InterGlobe Aviation with a target price of Rs 3961 in its research report dated March 27, 2024.

Broker Research

March 27, 2024 / 22:12 IST

Accumulate

Prabhudas Lilladher's research report on InterGlobe Aviation

We attended the InterGlobe Aviation (IndiGo) analyst meet wherein management highlighted plans to 1) add more than one aircraft per week 2) increase capacity by early double digits 3) expand the network by launching 10 new destinations and 4) add 5,500-6,000 employees in FY25E. Despite escalation in engine issues at P&W, growth guidance of early double digits is an indication IndiGo is well placed to mitigate supply chain challenges. In addition, commentary on yields was positive (expectation of growth in 4QFY24E versus a flattish guidance given earlier) with increasing focus on international markets. We increase our EBITDAR assumptions by ~4% over the next 2 years as we tweak our ASKM forecast given the growth commentary. Overall, we expect revenue CAGR of 13% over FY24E-FY26E with EBITDAR margin of 23.9%/23.2%/21.9% in FY24E/FY25E/ FY26E (lower in last year due to higher fuel cost).

Outlook

Retain ‘ACCUMULATE’ with a TP of Rs3,961 (earlier Rs3,312) as we increase our EV/EBITDA multiple to 8.5x (earlier 7.5x).

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