IndiGo Q4 Results Review: Brokerages Largely Bullish Amid Soft Crude Prices, Capacity Growth
Investec took a different stance, stating the beat was largely due to a surprise forex gain and that core profitability remained soft.
Brokerages are split on IndiGo after stellar fourth-quarter results, with profit rising 62%, surpassing analysts' estimates. While most see the skies ahead clearing, one brokerage is not on board with the consensus.
Morgan Stanley reiterated an 'overweight' rating and has hiked its target price to Rs 6,502 from Rs 6,085. The firm was impressed by the 13% Ebitda growth, which was credited to industry consolidation, a ramp-up in international routes, and softer fuel prices. While May traffic showed early signs of weakness, the brokerage sees better days ahead, as geopolitical tensions ease and demand rebounds.
Jefferies echoed the optimism, noting that IndiGo's fourth-quarter outperformance was driven by strong passenger growth and improved yields, even amid flight cancellations linked to geopolitical tensions. With crude prices soft and capacity growth for the current quarter expected in the mid-teens, Jefferies upped its target to Rs 6,300 from Rs 5,700, reiterating a 'buy'.
Citi called it a "healthy beat", with profit after tax soaring 62%. Strong PLFs during the Mahakumbh helped lift results, and management's bullish commentary on steady demand and ASK growth supported Citi's revised target of Rs 6,500 (up from Rs 6,400), and its 'buy' call. IndiGo's new routes to Manchester and Amsterdam, along with returning aircraft, are seen offsetting cost pressures.
But Investec isn't joining the optimistic refrain. The brokerage said the beat was largely due to a surprise forex gain and that core profitability remained soft. With EPS down 11% and pressure from rising maintenance costs and fading P&W engine compensation, it sees more downside risks. Investec warned that the stock is already pricing in strong future growth and maintained a 'sell' rating with a target of Rs 4,050.
IndiGo Share Price Today
The scrip fell as much as 2.42% to Rs 5,329.50 apiece. It pared losses to trade 0.07% lower at Rs 5,457.50 apiece, as of 10:08 a.m. This compares to a 0.88% decline in the NSE Nifty 50 Index.
It has risen 19.64% on a year-to-date basis, and 25.08% in the last 12 months. The relative strength index was at 56.93.
Out of 23 analysts tracking the company, 19 maintain a 'buy' rating, two recommend a 'hold' and two suggest 'sell', according to Bloomberg data. The average 12-month consensus price target implies an upside of 7.8%.
