Shares of InterGlobe Aviation Ltd. rose 2.4% in trade on Monday after a bullish review by global brokerage Jefferies, which saw a potential upside of over 20% in the counter.
The stock rose to an intraday high of Rs 5,030.50 apiece on the NSE, but pared some gains to trade 1.3% higher at Rs 4,982 as of 9:40 a.m.
The management has highlighted near-term industry rationalisation, with airlines prioritising profitability over growth amid elevated costs, Jefferies said in its note.
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"In the current high-cost environment, airlines are prioritising profitability over vol. expansion, with prudent capacity deployment aimed at protecting the bottom line. While this may moderate near-term industry growth, rationalisation could help maintain pricing discipline and improve the balance between supply and demand," Jefferies said.
However, despite operational challenges, there is resilience in pricing and yields, with management intact on its earlier capacity and Passenger Revenue per Available Seat Kilometer (PRASK) guidance.
Management has kept capacity projections for the second quarter little changed, while PRASK is seen growing 25% year-on-year.
Additionally, Jefferies outlined that management sees recent fare hikes as partly sticky, supporting medium-term revenue quality.
On the management front, the priorities of new CEO Willie Walsh include strengthening operational capabilities & building foundations for the next phase.
Jefferies also highlighted long-term growth and a strong balance sheet, with management reiterating its FY30 guidance. The airline is expected to see strong volume growth from fiscal 2028 onwards.
"IndiGo's Rs390bn of free cash and strong balance sheet provide financial flexibility as it transitions towards greater aircraft ownership and invests in infrastructure, including in-house MRO capabilities and an integrated campus," the brokerage underscored.
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