Shares of InterGlobe Aviation, which operates India’s biggest airline IndiGo, rallied 4 per cent on BSE to hit a new high of Rs 3,430 in Tuesday’s weak intra-day trade on strong growth prospects.
The stock surpassed its previous high of Rs 3,339 touched on March 19. In comparison, the S&P BSE Sensex was down 0.4 per cent at 72,559 at 12:18 pm.
On March 11, company’s co-founder Rakesh Gangwal divested a 5.83 per cent stake in Indigo through bulk deals to mop up Rs 6,786 crore.
He sold 22.5 million shares at Rs 3,016 a piece, data from the exchanges showed. Morgan Stanley Asia picked up 2.1 million shares worth Rs 633 crore. The names of the other buyers were not known.
Meanwhile, thus far in the financial year 2023-24 (FY24), IndiGo has outperformed the market by zooming 79 per cent as compared to a 23 per cent rally in the benchmark index.
The company saw profitable growth over the last 5 consecutive quarters. Going forward, the management said they will optimize the company’s resources to meet the robust demand for air travel and to drive profitable growth despite the supply chain constraints.
IndiGo dominates India’s domestic aviation market despite some erosion in market — which fell to around 60 per cent in February from more than 63 per cent in July, according to data from India’s aviation regulator.
IndiGo plans to add 10 new destinations in fiscal 2025 and manage a fleet of more than 600 aircraft by 2030 as it expects the number of fliers in India to more than double by the end of the decade.
The budget carrier expects capacity to grow in the “early double digits” next year, with a similar rate of increase in the number of passengers it flies, it said in an analyst presentation Friday. The pace is slower than growth seen in the December quarter and guidance for the current financial year, Bloomberg reported on Friday.
According to Motilal Oswal Financial Services (MOFSL), the Indian aviation market is highly underpenetrated currently, which provides huge room for growth for domestic players. This growth trajectory will be aided by increasing airport infrastructure and capacity additions in terms of aircraft orders, which could make India the third-largest aviation market in the world by calendar year 2023 (CY35).
IndiGo highlighted its three-pillar strategy for growth: affordable fares, lower cancellations and on-time performance. It also seeks to enhance customer experience and invest in talent. It aims to significantly expand its international network.
The management has also been making efforts to increase its global brand awareness. The stock is trading at 14x FY26E EPS of Rs 238and 7x FY26E EV/ EBITDAR, MOFSL said.
The brokerage has maintained its ‘neutral’ rating on the stock with a target price of Rs 3,510 as it believes that IndiGo would have to navigate through various challenges in the near to medium term.
First Published: Mar 26 2024 | 12:54 PM IST