Shares of Interglobe Aviation fell 10% to intra-day lows of Rs 3929.50 on NSE today as the aviation major reported a loss of Rs 987 crore for the second quarter ending September 2024. This marks a significant decline from a profit of Rs 189 crore in the same quarter last year and a profit of Rs 2,728 crore in the preceding June quarter.
Revenue Growth Amid Losses
Despite the net loss, the company’s revenue from operations surged 14% year-on-year to Rs 16,970 crore for the reporting quarter. Passenger ticket revenues reached Rs 14,359 crore, reflecting a 10% increase, while ancillary revenues rose by 21% YoY to Rs 1,875 crore.
Debt and Lease Liabilities
The capitalized operating lease liability for the airline stood at Rs 47,779 crore at the end of the September quarter. The total debt, including the capitalized operating lease liability, was reported at Rs 59,237 crore.
Strong Cash Position and Fleet Expansion
As of the end of the quarter, IndiGo reported a total cash balance of Rs 39,341 crore, which includes Rs 24,359 crore in free cash and Rs 14,982 crore in restricted cash.
The airline operates a fleet of 410 aircraft, comprising 41 A320 CEOs, 201 A320 NEOs, 112 A321 NEOs, 45 ATRs, 3 A321 freighters, 6 B737s, and 2 B777s, reflecting a net increase of 28 passenger aircraft during the quarter.
Strategic Developments and Future Capacity Plans
IndiGo announced plans to launch its business class in two weeks, aiming to enhance customer experience. The airline expects its third-quarter capacity, measured in available seat kilometers (ASKs), to grow by early double digits compared to the third quarter of fiscal year 2024.
Brokerages on InterGlobe Aviation
Goldman Sachs on IndiGo
Goldman Sachs has maintained a “Buy” rating on Interglobe Aviation, but has reduced its target price to Rs 4,800. The investment firm noted that the company’s Q2 earnings per share (EPS) came in at Rs (25.7), while the profit before tax (PBT), excluding foreign exchange effects, was reported at Rs (17.3), both below Goldman Sachs’ estimates.
The reort also adds although available seat kilometers (ASK) and revenue passenger kilometers (RPK) were largely in line with expectations, yields exceeded estimates by 2.5%, reflecting a 2.5% year-on-year increase, compared to Goldman Sachs’ forecast of flat year-on-year growth.
Motilal Oswal on IndiGo
Motilal Oswal has issued a report on Interglobe Aviation, maintaining a “Neutral” rating and setting a target price of Rs 4,130. The report notes that the company has reported a net loss attributed to seasonal factors; however, management’s guidance remains intact.
“Currently, over 60 aircraft are grounded due to Pratt & Whitney engine issues, with the management expecting this number to decrease to the mid-40s by FY26. The stock is currently trading at 10 times the estimated EV/EBITDAR for FY26,” the report adds.
Kotak Institutional Equity on IndiGo
Kotak Institutional Equity has released a report on Interglobe Aviation, maintaining a “Buy” rating while reducing the target price to Rs 5,200 from Rs 5,400. The report highlights a sharp earnings miss driven by aircraft on ground (AOG) effects, which are believed to have peaked, and heightened seasonality.
Despite this, demand trends remain healthy; however, weak pricing reflects a high base and increased competition. The firm emphasizes that there is a continued focus on investments to support growth and profitability in the long term.
Stock Performance in Last One Year
IndiGo shares have delivered mixed returns across various time frames. Over the last month, the stock has shown a negative return of 8.70%. In the last six months, the performance has been even impressive, with a substantial increase of 14.52%, showcasing the stock’s resilience and upward momentum.
Year-to-date, IndiGo shares have surged by 47.15%, emphasizing the stock’s positive trajectory in the current calendar year. Looking back over the last twelve months, the stock has demonstrated significant growth, surpassing 79%. These consistent positive returns underscore the stock’s strong performance and appeal to investors.
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