B&K Securities has initiated coverage on InterGlobe Aviation Ltd. with a 'buy' rating and a target price of Rs 7,256 per share, implying an upside potential of 28.7% from current levels. The brokerage values the stock at 26 times FY27E EPS, reflecting strong earnings visibility and market leadership in a structurally growing industry.
India's Air Travel Sector Poised For Multi-Year Growth
India remains one of the most under-penetrated aviation markets globally, with only 0.1 air trips per capita, compared to 0.5 in China, said the brokerage.
B&K expects India's air passenger market to clock a 9.5% CAGR over 2023–27, supported by economic growth, infrastructure expansion, and government initiatives like UDAN and the planned development of 50 new airports over the next five years.
Supply Constraints Support Industry Profitability
Aircraft supply remains constrained due to persistent global supply chain issues affecting manufacturers like Boeing and Airbus. With delivery timelines stretched to five to six years, the demand-supply mismatch is likely to persist in the medium term.
According to B&K, the Indian aviation sector now operates as an oligopoly, following a decade of consolidation. This shift ensures better pricing power and sustainable profitability, akin to the trajectory seen in the US airline market post-2000s consolidation.
IndiGo: A Cost Leader With Customer-First Approach
IndiGo's operational model centres on low-cost, no-frills services, the brokerage said in its report. Its fleet strategy, predominantly comprising Airbus A320neo aircraft, keeps fuel and maintenance costs low. The airline's focus on punctuality, minimal customer complaints, and efficient operations reinforces its reputation and market dominance.
IndiGo commands ~64% of India's domestic market and aims to grow internationally with a robust aircraft order book of 955 planes—2.3 times its current fleet.
Strong Financial Growth Outlook
B&K projects IndiGo to deliver a 20% Ebitda CAGR and 22% PAT CAGR over financial years 2025–2027. The company's expanding international presence, enhanced fleet, and cost leadership are expected to support margin expansion and profitability, said the brokerage. IndiGo is also forecast to add more than one aircraft per week in FY26, enabling a ~13% year-on-year ASK growth.
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