- IndiGo shares rose nearly 10% to Rs 4,332 on April 1 amid ATF pricing clarity
- Indian Oil revised ATF price increase to 8.5%
- Only 25% of ATF price hike passed to domestic flights, full rise on international routes
IndiGo shares rose as much as 9.9% to Rs 4,332 on April 1, as clarity on aviation turbine fuel pricing reduced concerns over a sharp rise in costs. The stock traded at Rs 4,281 at 10:08 am, with volumes at nearly double the 20-day average, a move that followed a series of updates on ATF prices that triggered early volatility before being scaled back.
At around 6:40 am, Indian Oil Corp. raised ATF prices by 115% to Rs 2,07,341 per kilolitre, compared with Rs 96,638 earlier. The increase also reflected international run rates rising to $1,690.81 per kilolitre from $816.91. The sharp revision raised concerns as fuel accounts for nearly 30% of airline revenue and implied unit costs could rise to Rs 3.1 per kilometre from Rs 1.5.
By 9:09 am, reports suggested the hike applied only to chartered and certain scheduled flights. IndiGo shares opened at Rs 4,035.4, up 2.3%. Minutes later, at 9:17 am, reports citing airlines said domestic scheduled carriers would not be impacted, pushing the stock to Rs 4,097.7.
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At 9:38 am, Indian Oil Corp. revised the increase on its website to 8.5% month-on-month, instead of 115%. The stock moved to Rs 4,123.1. At 9:45 am, the Ministry of Petroleum and Natural Gas said only 25% of the total increase had been passed on to domestic routes, while international routes would bear the full rise. Shares extended gains to Rs 4,191.4.
IndiGo had already imposed a fuel surcharge on March 14, indicating an 8–10% fare increase. This could raise unit revenue by Rs 0.3–0.4 per kilometre, covering about 20% of higher fuel costs. Every 5% increase in ATF prices affects margins by 150 basis points and earnings per share by 20%, according to analysts.
Analysts said a 30–35% increase in ticket prices, or about Rs 2,000 per ticket, would be required to fully pass on costs.
IndiGo shares had fallen 18% in March amid rising crude prices, with markets anticipating a sharp increase in ATF rates.
In a separate development, the company appointed William Walsh as chief executive officer. Meanwhile, shares of SpiceJet rose as much as 4.7% to Rs 10.20.
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