IndiGo Gets Its Most Bullish Target Price As Yet By Motilal Oswal — Here's Why
Motilal Oswal has raised its target for InterGlobe Aviation, parent of IndiGo, citing easing crude prices and rising domestic travel demand as key drivers of profitability through FY27.
Motilal Oswal Financial Services has upgraded InterGlobe Aviation Ltd., the parent of India's largest airline operator IndiGo, to a 'buy' rating, citing falling fuel prices and increasing domestic demand. The brokerage has set a target price of Rs 6,550, implying a 27% upside from the current market price of Rs 5,151.
That's the highest price target among the brokerages tracked by Bloomberg.
A key factor behind the upgrade is the revised Brent crude assumption of $65 per barrel for fiscal 2027, down from the earlier $70. Aircraft fuel comprises nearly 40% of IndiGo's expenses, and the easing of oil prices amid the unwinding of OPEC+ cuts is seen as a major tailwind.
Motilal expects IndiGo's operating income and profit after tax to grow at a CAGR of 28% and 38%, respectively, over the next two fiscals.
The company plans to raise its international capacity share to 40% by financial year 2030 from the current 28%, aided by a record order book of 925 aircraft, says Motilal.
The airline is also betting on codeshare deals and tech innovations like AI-powered tools to streamline operations and boost customer experience, they added.
The note also highlighted Chief Executive Officer Pieter Elbers' influence since taking charge in 2022. Elbers is steering IndiGo towards global relevance while maintaining its low-cost DNA, believes the analyst. However, they noted that Elbers' role also represents a potential "key man risk."
Risks to the brokerage's bullish case include delays in aircraft delivery, sharp volatility in crude and forex, or a shift towards a more premium fleet that could undercut cost advantages, as per the note.
