IndiGo Has Jefferies Optimistic Amid Network Expansion, Product Diversification And More

Jefferies has maintained a 'buy' rating for InterGlobe Aviation Ltd. after its management cited expansion in three major segments, including the international network, product diversification, and strategic codeshare partnerships with other airlines to offer a wider array of destinations.

IndiGo's management has reiterated long-term term tailwinds for aviation growth in India due to the near-term impact of geo-political tensions. It also discussed focus on cost leadership and timely ordering of fleet amid consolidation efforts.

Citing the airline management on its strong long-term positioning in the Indian market, the research firm stated, "With over 60% domestic market presence, a young and fuel-efficient fleet, and a vast order book exceeding 900 aircraft, IndiGo is well-positioned to capture rising air travel demand in India, both in the domestic and outbound travel segments."

It added IndiGo is targeting a fleet size of more than 600 by financial year 2030 against the current 400.

The airline plans to launch medium and long-haul routes across Europe and will also be gearing up for entry in the North American market in the medium term, to support its international expansion strategy, the brokerage said.

IndiGo is expanding its service offerings by adding more premium 'stretch' seats on select international routes. The management hopes the move will attract corporate and affluent travellers, who previously preferred full-service airlines, Jefferies said, citing the management.

The management expects geopolitical impact on growth to be transient, the brokerage noted. "April was strong following robust Quarter 4 performance, while May was impacted due to booking cancellations (post the recent geopolitical tensions) and June has seen recovery," it said, noting the management's stance.

It also noted IndiGo's outstanding performance in cutting down on carbon emissions per available seat kilometre or ASK, as compared to its peers. This initiative has advanced its progress toward meeting Environmental, Social, and Governance commitments, Jefferies said.