IndiGo's December Meltdown Prompts Citi To Reduce Target Price — Check New Upside Potential

IndiGo’s operations continue to feel the strain from the new flight duty time limitation norms, notes brokerage firm Citi, emphasising that the regulatory changes have caused a significant disruption to the airline’s network.

The issues, which began with operational challenges on Dec. 2-3, cascaded across IndiGo’s complex system, amplifying delays and cancellations. Citi said that while operations are gradually improving, full normalisation — defined as 2,200–2,300 daily flights — may still take time.

As a result, Citi trimmed its target EV/sales multiple to 2.6x from 2.7x and lowered the target price to Rs 5,800, from Rs 6,500 earlier, bringing down potential upside to nearly 18% . Despite the near-term pressure, it maintained its 'buy' rating, citing strong demand and IndiGo’s sustained market share. The brokerage said it does not expect a major shift of passengers to competitors given current fleet and network capacities.

The new FDTL norms came into effect on 1 Nov., extending weekly rest, widening the night duty window and placing restrictions on night flying hours. Citi pointed out that although IndiGo operated steadily through most of Nov., a mix of technology glitches, winter schedule adjustments, adverse weather and route congestion triggered the spillover effects seen in early Dec., made worse by lower redundancy in IndiGo’s network.

Jefferies added that the Ministry of Civil Aviation has asked IndiGo to cut at least 10% of its domestic winter flight schedule — about 215 of the planned 2,145 daily departures — through Mar. 2026. There is no guidance yet on FY27. The ministry believes this scaling back will help the airline reset its roster, with weekly reviews planned.

Jefferies added that while the aviation regulator expects other airlines to utilise some of the freed-up slots, the ability to absorb growth is limited due to capacity constraints. The ministry has also introduced fare caps on affected routes to prevent sharp price spikes for passengers.