Interglobe Aviation (IndiGo) shares continue to extend their losses on Monday after falling over 19 per cent in the previous trading session on the back of investor concerns over the targeted fleet size by March. InterGlobe Aviation on Thursday (Jan 21) reported a 23.7 per cent jump in net profit at Rs 657.28 crore for the three months to December 2015, but said it will miss the 111-fleet target by March following labour issues at Airbus. The airline, which got listed in November 2015, had a net profit of Rs 531.57 crore in the year-ago period.
The fall of 19 per cent on Friday was the biggest fall in InterGlobe Aviation shares from the day of listing on November 10, 2015.
At 1 pm, InterGlobe Aviation shares were trading 6.32 per cent down at Rs 907.50. The scrip opened at Rs 940 and had touched a high and low of Rs 953.25 and Rs 896.75, respectively, in trade, so far. Later, the share price of the company closed 6.79 per cent down at Rs 903.
Amar Ambani, head of research, IIFL, said, “InterGlobe Aviation runs the most efficient airline business in an otherwise bleeding industry, the world over. The company may see steady revenue growth but competition, pricing wars and regulatory overhang may not allow super-normal growth. The management will have to win faith of investors over time as eye-brows are being raised on its poor Q2 results and high valuation despite material networth withdrawal just before IPO. Despite Friday’s sharp correction, its best to wait and watch rather than rushing in to buy, only because some big names have put their money in the stock.”
During the third quarter ended December 2015, average fare declined to Rs 4,517 from Rs 5,262 in the same quarter last year. The management cited that average fares had declined due to the pass-through of decline in fuel costs to stimulate demand.
Motilal Oswal in a research note said, “We cut our earnings for 2015-16 by 25 per cent to factor in actual 9MFY16 results and for FY17/FY18 by around 18 per cent to factor in A320neo delays and higher employee costs. We believe that any positive news on aircraft deliveries will be a positive trigger for the stock. We roll forward our fair value to 2017-18 basis and arrive at a target price of Rs 1,474. We maintain ‘Buy’ on the stock.”
IndiGo is India’s largest airline with a market shares of 35.6 per cent in December 2015.