Aviation Q2 Results Preview - Weak Quarter, A Concoction Of Seasonality, Higher Crude Price: ICICI Securities

ICICI Securities Report

Q2 has been impacted by higher crude price (aviation turbine fuel up 4.97% QoQ) while being seasonally weak. Additionally, the quarter’s highlights include:

1. There has been an issue of Aircraft on Ground, which will likely be partially offset by original equipment manufacturer compensations. Interglobe Aviation Ltd. added 23 aircraft in the first five months of FY24.

2. Lower passenger load factors especially for IndiGo – while maintaining ~63.3% domestic pax share as of August 2023.

3. QoQ rise in jet kero cracks,

4. Forex loss from weaker Indian rupee (Indian rupee depreciated end to end from 82.04 to 83.04).

Despite a weaker Q2, we stay positive on IndiGo given its steadily improving business salience in terms of competitive position (63% market share), destination expansion (started 14 new routes in Q2 FY24) and overall favorable supply-demand outlook for India.

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