IndiGo - Forex Impacted Earnings, Recovery In Sight: Geojit Research

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Indigo aircraft at an airport in India. (Photo: Vivek Prakash/ Reuters)

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Geojit Research Report

InterGlobe Aviation Ltd.'s Q1 FY23 revenue grew by 327% YoY, albeit at lower base, was better than expected, supported by 80% load factor and healthy ticket prices.

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Despite strong top-line growth, IndiGo reported a loss of Rs 1065 crore. Key reasons are higher fuel cost and adverse movement in currency.

Fuel cost to sales was at 47% versus 40% YoY and QoQ. While Rs 1,400 crore of forex loss also added to woes. Going ahead, we expect profitability to come in near term given moderation in aviation turbine fuel prices, stable ticket price and strong load factors.

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We don't expect any further adverse moment in forex similar to Q1 FY23. Further, replacement of older aircrafts is likely to improve operating efficiency in the medium term.

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