IndiGo Q4 Results Review: Motilal Oswal Maintains 'Buy', Says Global Scale-Up To Boost Growth

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Motilal Oswal Report

Interglobe Aviation Ltd. has adopted a completely different operational strategy after Mr. Pieter Elbers joined the company as the new CEO in Sep’22. He has over 30 years of experience working at different positions at KLM Royal Dutch Airlines. His wealth of experience has not only helped IndiGo compete with global majors but also consistently increase its market share in the domestic market. However, this could also pose a ‘key man’ risk.

IndiGo serves over 100 million passengers and adds one aircraft a week (on average). It has expanded its international share to ~30% in FY25 of Available Seat Kilometers through strategic airline partnerships. The company focuses on strengthening its global presence via loyalty programs and proactive brand building efforts while continuously refining schedules to enhance reliability and attract a larger share of international travelers. 

The stock is trading at 20.5x FY27E EPS of Rs 265.7 and 9.1x FY27E EV/Ebitdar. We reiterate our Buy rating with a target price of Rs 6,375 (based on 10x FY27E EV/Ebitdar).

Key downside risks:

1. delays in wide-body aircraft deliveries or rising aircraft on ground;

2. sharp volatility in crude or rupee could pressure margins if not passed on;

3. a higher share of business-class seating or premium fleet may dilute IndiGo’s cost advantages.

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