InterGlobe Aviation, which runs no-frills carrier IndiGo, is set to hit capital markets with its public offer or initial public offering (IPO) next week. The issue will open on October 27 and close on October 29. The company has fixed the price band for its initial share sale at Rs 700-765, through which it could raise up to a little over Rs 3,000 crore. According to InterGlobe Aviation it will retire nearly one-third of its total debt of Rs 3,912 crore from the share-sale proceeds.
IndiGo is one of the two profit-making domestic airlines with the other one being GoAir. At present, only two domestic scheduled carriers – Jet Airways and SpiceJet – are listed, while trading in long-grounded Kingfisher Airlines has been suspended for a long time.
For the financial year ended March 2015, InterGlobe Aviation reported net profit of Rs 1,295.58 crore, up 173 per cent, against Rs 474.44 crore in the previous financial year. The company registered net profit of Rs 987.3 crore in the financial year ended March 2013.
Total revenue of the company grew 25.16 per cent year-on-year to Rs 14,309.14 crore in FY 15 against Rs 11,432.12 crore last year.
The global coordinators and book running lead managers to the issue are Citigroup Global Markets India Private Ltd, JP Morgan India Pvt Ltd and Morgan Stanley India Company Pvt Ltd. The book running lead managers are Barclays Bank PLC, Kotak Mahindra Capital Company and UBS Securities India Pvt Ltd.
IndiGo is currently operating 97 planes and offers 648 flights daily, and commands 33.8 per cent market share of domestic traffic, according to reports.
Aditya Ghosh, president, whole-time director, Indigo Airlines gave five reasons why an investor should subscribe to InterGlobe Aviation IPO.
1. We are the most profitable airline in fastest growing aviation market in the world. The company is the most profitable in India since FY 2009.
2. The airline is expected to see a 20 per cent growth in future.
3. Costs structures are coming down which can help us to generate decent profits going forward.
4. We have got a competitive advantage which no one can replicate for the next five years.
5. Indigo is the largest domestic career with 33.9 per cent market share.