Unlike major aviation markets (USA, China, Europe) where a clear oligopoly exists among top three-four players, IndiGo changed India's scenario with a near-monopoly, due to key factors including superior fleet size (~416 aircraft vs ~313/30/56 of Air India Group/Akasa/SpiceJet), a low cost, high efficiency model, gradual weakening of competition and consistent fleet addition even amid supplychain issues.
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Anand Rathi Report
Nailing the LCC model, Interglobe Aviation Ltd. managed to capture its home market achieving ~64.4% share, supported by a fleet of ~416 aircraft and an orderbook of ~910 aircraft.
Notwithstanding a weak H1 FY26, we expect a strong H2 due to festive season and higher discretionary spends prompted by GST rate cuts and this sustained demand trajectory is expected to continue going forward as well.
We believe IndiGo to be a long-term compounding story supported by disciplined low-cost model, India market dominance, strategic expansion, healthy balance sheet and robust long-term growth prospects.
Hence, we initiate coverage with a Buy rating, at a 12-mnth target price of Rs 7,000, valuing at 10 times Sep'27e Ebitda.
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