HSBC Sees More Skies For IndiGo, Hikes Target Price
Brokerage sees a 21.3% upside for IndiGo, backed by a near-monopoly on two-thirds of its domestic capacity.
HSBC Global Research has raised its target price on InterGlobe Aviation Ltd., the parent company of IndiGo, to Rs 6,650 from Rs 5,975 previously, implying an upside of 21.3%. The brokerage has maintained its buy rating, noting that IndiGo’s “healthy strategy” could help it grab the winner’s crown.
HSBC said IndiGo’s plausible network strategy, focused on expanding domestic routes beyond the competitive top-tier markets, is paying off. The airline has reduced its reliance on key but cut-throat routes, with the top 15 domestic routes now accounting for just 20% of its capacity, compared to 30% in 2019. At the same time, IndiGo has cemented a near-monopoly on 66% of its domestic capacity, holding more than a 60% share on those routes, up from 53% in 2022.
The brokerage said demand has almost fully recovered after a temporary lull in April and May, driven by geopolitical tensions. Fares on some routes remain soft, but the overall trading outlook is solid, thanks to tight capacity in the market.
On international operations, HSBC said IndiGo’s strategy to tap global markets looks sensible despite execution challenges. The airline’s cost advantages, experienced management, and supportive macro environment should help it establish a strong presence abroad. While HSBC is not overly bullish on international performance in the short term, it sees medium- to long-term profitability upside.
The brokerage also expects cost pressures to ease, with IndiGo aiming to keep non-fuel unit costs flat in the financial year 2026. Lower aircraft-on-ground issues and healthy capacity growth should support this target.
Following the company’s fourth-quarter results, HSBC has raised its Ebitda forecast for the financial years 2026 and 2027 by around 2%. It has also increased its net profit estimates by 19% and 18%, respectively, after revising the tax rate to align with company guidance.
Indigo Share Price Today
Indigo stock rose as much as 1.89% during the day to Rs 5,584 apiece on the NSE. It was trading 1.75% higher at Rs 5576.5 apiece, compared to a 0.53% advance in the benchmark Nifty 50 as of 11:00 a.m.
Nineteen out of the 23 analysts tracking Indigo have a 'buy' rating on the stock, two recommend a 'hold' and two suggest a 'sell', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 5983.77, implying an upside of 7.3%.
