IndiGo Q3 Results: Profit Falls 18% On Forex Loss

IndiGo parent InterGlobe Aviation Ltd. has posted a fall in its bottom line for the quarter ended December, impacted by rupee depreciation and a higher number of grounded planes, despite strong demand.

Net profit of the operator of India's largest airline fell 18.3% to Rs 2,448.8 crore over the previous year, according to an exchange filing on Friday. This was primarily due to the carrier incurring a foreign exchange loss of Rs 1,456.4 crore between October and December. Analysts tracked by Bloomberg had shared a consensus estimate of Rs 2,640 crore in profit.

The airline's foreign exchange risk stems from its lease liabilities and maintenance obligations, predominantly in US dollars. By the end of December, the rupee had depreciated about 2% from the previous quarter, leading to a forex loss, according to the company's management.

• Revenue up 13.7% at Rs 22,110.7 crore (Bloomberg estimate: Rs 21,536 crore)

• Ebitdar rose 10.7% to Rs 6,059 crore.

• Ebitdar margin stood at 27.4% versus 28.1%.

• Net profit down 18.3% at Rs 2,448.8 crore (Estimate: Rs 2,640 crore)

Profits, excluding the impact of currency volatility, rose 26.1% over the previous year to Rs 3,846.1 crore. "These results were driven by robust demand in the market and our ability to cater to that demand supported by lower fuel prices," according to Chief Executive Officer Pieter Elbers. The fuel costs during the quarter had fallen by 6%.

However, the airline's cost per available seat kilometre, excluding fuel, rose sharply by 23.1% over the previous year to Rs 3.25, underscoring the impact of inflationary pressures, grounding-related costs, and higher operational costs. Depreciation and amortisation expenses also jumped 34% during the quarter. Overall, the company's expenses rose 20% to Rs 20,465.7 crore.

During the quarter, available seat kilometres, a measure of an airline's capacity to carry passengers, increased by 12% to 4,080 crore. Meanwhile, revenue passenger kilometres, which indicates the number of passengers carried, rose by 13.5% to 3,550 crore.

The airline's load factor improved by 1.2 percentage points, reaching 86.9% in the December quarter. However, the yield per passenger experienced a slight decline of 1%, dropping to Rs 5.43.

IndiGo ferried 273.25 lakh passengers during the quarter, commanding a market share of 63.8% as against a share of 62.1% in the year-ago period.

The airliner had 437 aircraft in its fleet at the end of the quarter, up from 410 in the previous quarter. According to the management, the number of grounded planes in the airline's fleet is currently "in the 60s." It operated a peak of 2,200 daily flights during the quarter, including non-scheduled flights.

"We touched new milestones as we operated a peak of 2,200 daily flights and served a record 31.1 million passengers during the quarter," Elbers said.

IndiGo's total cash reserves stood at Rs 43,781 crore as of December, a 35% increase over a year-ago period. Free cash grew by 50.5% to Rs 28,904 crore, while total debt surged 27.3% year-on-year to Rs 65,139 crore, mainly due to capitalised operating lease liabilities, which have shot up 11.3% to Rs 49,598 crore during the quarter amid rupee depreciation.

While the currency remains volatile and has further depreciated in January, the airline has been actively taking steps to mitigate its impact by hedging part of its foreign currency outflows. "This quarter, we have gained Rs 59.1 crore from our hedging contracts," the airline's Chief Financial Officer Gaurav Negi said. "As we add more international capacity, we expect natural hedges to also improve."

Elbers mentioned that the airline now operates flights to 90 domestic destinations. Internationally, the airline serves 38 destinations and aims to add at least two more cities to its global network by the end of the year.

The airline expects its carrying capacity to rise 20% in the March quarter compared to the same quarter last year.

Shares of IndiGo's parent company closed 0.7% higher at Rs 4,162.25 apiece on the NSE ahead of the results, as compared with a 0.5% decline in the benchmark Nifty.