IndiGo's 'Wings Getting Clipped', Says Kotak After Slashing Price Target

IndiGo share price faced a fresh setback on Thursday after a brokerage cut price target following the carrier lowering its near-term expectations.

Kotak Securities lowered its price target for the airline to Rs 5,350 from Rs 5,700, saying IndiGo may face pressure as rivals move to use its unused flight slots and as the carrier works to hire more experienced pilots.

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Morgan Stanley kept its ‘Overweight' view, with a target of Rs 6,540, and said the long-term outlook for the company remains steady despite weak earnings in the coming months.

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Kotak said about one in ten of IndiGo's daily flights could be exposed to competition as Air India, Akasa and SpiceJet look to take over available slots. The firm cited aviation expert Sanjay Lazar, who said Akasa could add about six aircraft by March 2026 and SpiceJet could add 18 leased aircraft, increasing their ability to absorb these routes. Kotak added that IndiGo's weaker pricing outlook for the third quarter likely reflects soft demand in November.

Morgan Stanley said the stock could offer entry opportunities if short-term earnings remain under pressure. It said the company's long-term prospects are still supported by steady industry growth, its widening lead over domestic competitors and the expansion of its international routes. It noted that the stock trades at about eight times its estimated FY27 earnings before interest, tax, depreciation and amortisation, compared with a pre-pandemic average of 8.5 times.

The brokerage said movements in the rupee, fuel prices and the pace of international travel growth pose risks. Rising competition, capacity expansion by peers and higher crude oil prices also remain challenges.

Citi recently cut its valuation multiple for IndiGo to 2.6 times estimated sales from 2.7 times and reduced its price target to Rs 5,800 from Rs 6,500, which brings the implied upside to about 18%.

The airline cancelled thousands of flights since last week because of inadequate pilot roster planning for new rest and duty rules. The disruption left tens of thousands of passengers stranded and grounded several aircraft.

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