IndiGo Falls Most in Almost Two Years as Results Disappoint

(Bloomberg) -- Shares of InterGlobe Aviation Ltd., which runs India's biggest airline, tumbled the most in almost two years after net income and revenue fell short of estimates due to a rise in fuel costs and foreign-exchange losses.

IndiGo dropped 10 percent in Mumbai on Thursday, the most since August 2016. The stock has plunged 20 percent since touching a record on April 20, wiping out about $1.7 billion in market value.

Higher fuel costs make it difficult for airlines to maintain low ticket prices in the country. Shares of IndiGo's India-based rivals Jet Airways (India) Ltd. and SpiceJet Ltd. also tumbled, by 12 percent and 6 percent each. IndiGo and its competitors were among the worst performers on the S&P BSE 500 Index.

IndiGo's net income dropped 73 percent to 1.18 billion rupees ($18 million) in the three months through March from a year ago. That compares with the average estimate of 4.99 billion rupees in a Bloomberg survey.

The disappointing earnings come on the back of the resignation of President Aditya Ghosh last week, an announcement that triggered the sell-off. Twelve years after kick-starting services, the budget airline that controls almost 40 percent of India's air travel market is facing turbulence at a time it's pursuing its low-cost, long-haul ambitions. The latest Airbus SE A320neo aircraft powered by some faulty Pratt & Whitney engines have hobbled operations after snags led to the grounding of many planes.

“Aditya Ghosh's exit has rattled investors,” said Mark Martin, founder of Martin Consulting. With oil where it is, “airline stocks the world over will be affected on account of a hit on earnings and yield.”

India Said to Probe IndiGo Stock Drop Before Company Filing

A more than 40 percent jump in crude oil prices in the past year has raised fuel costs for airlines.

To contact the reporter on this story: P R Sanjai in Mumbai at psanjai@bloomberg.net.

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Sam Nagarajan

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