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Prabhudas Lilladher Report
InterGlobe Aviation Ltd. reported a record quarter with all time high revenue/profit after tax of Rs 166.8 billion/Rs 30.9 billion respectively aided by strong load factor of 88.7% (our estimate: 88.0%) and yield of Rs 5.1 (our estimate: Rs 4.9) coupled with 26.6% YoY decline in fuel cost available seat kilometer to Rs 1.6 (our estimate: Rs 1.7) amid fall in crude prices.
We believe IndiGo is well placed to strongly benefit from-
capacity deployment (north of mid-teens capacity guidance remains intact for FY24E, despite escalation in engine issues at Pratt & Whitney),
network expansion in domestic as well as international markets and
superior balance sheet (Rs 157 billion of free cash).
Despite a record quarter, we cut our Ebitdar estimates by ~7% each for FY24/FY25E as yields are witnessing higher pressure on sequential basis (as compared to past) while aviation turbine fuel prices have increased by ~11% in last two months.
We expect revenue compound annual growth rate of 15% over next two years with Ebitdar margin of 25.4%/28.1% in FY24E/FY25E.
Retain ‘Buy' with a target price of Rs 2,855 (enterprise value/Ebitdar multiple of seven times December-24E; no change in target multiple).
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