IndiGo's September-quarter loss narrowed sharply, but the airline's latest results reveal the extent to which elevated fuel costs continue to weigh on its operating performance. While revenue rose 25.9% and EBITDA more than tripled, the fuel bill surged 67%, Ebitdar declined 3% and the airline had to cut capacity by 1%.
Brokerages are now looking beyond the seasonally weak September quarter, with expectations of a sharp recovery in passenger revenue per available seat kilometre (PRASK) in Q3 FY27. Jefferies, UBS and HSBC expect PRASK growth of more than 25%, while Nomura is more bullish, forecasting growth of around 30%.
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The brokerage outlook, however, is not unanimous. Nomura has raised its target price and earnings estimates, while Jefferies and UBS have cut their targets, citing near-term cost pressures. The focus is now on whether stronger ticket pricing, disciplined capacity deployment and eventual fuel-cost normalisation can drive a sustained earnings recovery.
IndiGo Q2 Results: Revenue Rises 26%, EBITDA Jumps 229%
InterGlobe Aviation, the parent company of IndiGo, reported a consolidated net loss of Rs 1,879 crore for Q2 FY27, compared with a loss of Rs 2,582 crore in the corresponding quarter last year. The loss was also narrower than the consensus estimate of Rs 2,063 crore.
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Revenue from operations increased 25.9% year-on-year to Rs 23,364 crore from Rs 18,555 crore, exceeding the market estimate of Rs 22,988 crore.
EBITDA surged 229% to Rs 1,908 crore from Rs 579 crore a year earlier, with the EBITDA margin expanding to 8.2% from 3.1%.
However, the improvement in EBITDA did not translate into stronger Ebitdar. Earnings before interest, tax, depreciation, amortisation and rent declined 3% to Rs 3,667 crore from Rs 3,792 crore. The Ebitdar margin contracted to 15.7% from 20.4%.
The airline's fuel expenditure rose 67% during the quarter to around Rs 10,000 crore, reflecting the impact of exceptionally high fuel costs.
Why Are Brokerages Looking For A Q3 Pricing Recovery?
IndiGo's management said the September quarter was seasonally weak and affected by geopolitical turmoil and elevated fuel costs. Chief Executive Officer Willie Walsh said the airline responded by prudently reducing capacity and managing yields, although these measures only partially offset the increase in costs.
Available seat kilometres (ASKs), a measure of passenger-carrying capacity, declined 1% during the quarter.
For Q3, however, brokerages expect a major improvement in passenger revenue per available seat kilometre, or PRASK, which measures the revenue generated from each unit of passenger capacity.
Nomura expects PRASK growth of around 30%, while Jefferies, UBS and HSBC see growth of more than 25%. Nomura believes improved pricing could recover 80-90% of fuel-cost inflation.
The expected improvement in pricing could help offset cost pressures, although the extent of recovery will depend on fuel prices, capacity discipline and passenger demand.
IndiGo Q2: What Four Brokerages Say
Nomura Raises Target To Rs 6,200, Sees 40% EBITDA CAGR
Nomura has maintained its Buy rating and raised its target price to Rs 6,200 from Rs 6,000. It expects around 30% PRASK growth in Q3, with pricing recovering 80-90% of fuel-cost inflation.
The brokerage has raised its FY27 and FY28 EBITDA estimates by 11% and 3%, respectively. It expects EBITDA margins to expand to 21% in FY28, supported by lower fuel prices and fleet growth.
Nomura also forecasts an EBITDA compound annual growth rate of around 40% over FY26-FY29, making its outlook the most optimistic among the four brokerages.
Jefferies Cuts Target To Rs 5,650, Retains Buy
Jefferies has maintained its Buy rating but reduced its target price to Rs 5,650 from Rs 5,840. The brokerage expects low-single-digit ASK growth in FY27, followed by mid-teens capacity expansion in FY28.
It expects PRASK to increase more than 25% in Q3, supported by disciplined capacity deployment. However, Jefferies has cut its FY27 earnings estimates by 9%, with elevated fuel costs remaining a key risk.
UBS Cuts Target To Rs 5,050, Maintains Neutral
UBS has maintained its Neutral rating while lowering its target price to Rs 5,050 from Rs 5,450. The brokerage has cut its FY27 and FY28 EBITDA estimates by 7% and 20%, respectively, but raised its FY29 estimate by 6%, factoring in fuel-cost normalisation.
UBS expects more than 25% PRASK growth in Q3 and sees IndiGo targeting around 300 billion ASKs by FY30, supported by international expansion and long-haul operations.
HSBC Retains Buy, Flags Rising Unit Costs
HSBC has maintained its Buy rating with a target price of Rs 5,545. The brokerage expects more than 25% PRASK growth and low-single-digit capacity expansion in FY27.
However, it expects ex-fuel unit costs to increase by high-single-digit to low-double-digit percentages. HSBC also expects international capacity growth to moderate.
The brokerage sees ancillary services, cargo, business-class offerings and the BluChip loyalty programme as important growth priorities, alongside a return to mid-teens capacity expansion in FY28.
IndiGo's Fleet Expansion And Long-Term Growth Plans
IndiGo ended September 2026 with a fleet of 442 aircraft, compared with 432 in June 2026 and 417 in September 2025. The fleet comprised 41 owned aircraft, 66 under finance leases, 330 under operating leases and five under damp leases.
While near-term capacity growth is expected to remain measured, the airline's longer-term ambitions remain centred on international expansion and long-haul operations. UBS expects IndiGo to target approximately 300 billion ASKs by FY30.
The top variables to track are now PRASK growth, fuel costs and the pace of capacity expansion. The September quarter showed that stronger revenue and EBITDA do not necessarily translate into improved underlying operating profitability when fuel costs remain elevated. The next few quarters will test whether pricing recovery can close that gap.
READ | IndiGo Q2 Results: Airline's Net Loss Narrows To Rs 1,879 Crore As Revenue Climbs 26%
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