Indigo shares recovered by nearly 8% from its lows during the day's trade on value buying. InterGlobe Aviation's shares have dived over 30% so far this year.
InterGlobe Aviation share price dropped over 5% in early morning trade on Thursday after the company reported its first quarterly loss since its listing in November 2015. Shares of InterGlobe Aviation dropped 5.4% to an intra-day low of Rs 773 per share on the BSE, while the shares dropped 3.7% on the National Stock Exchange. InterGlobe Aviation’s shares have dived over 30% so far this year.
However, Indigo shares recovered by nearly 8% from its lows during the day’s trade on value buying. At the time of reporting, shares of InterGlobe Aviation were trading 2.51% higher at Rs 837.60 per share on the BSE. Shares of rival airline Jet Airways were trading at Rs 225.60 per piece, up 2.24%. On the other hand, SpiceJet share price was trading lower by 1.26% at Rs 70.65 per share.
Interglobe Aviation, the operator of low-cost carrier IndiGo, on Wednesday reported a net loss of Rs 652 crore for the quarter ended September against a profit of Rs 551 crore during the same period last year. The airline’s financials were hurt by higher fuel costs, weak rupee and intense low fare competition.
In the previous quarter, the airline had reported a dip of 97% in its net profit to Rs 28 crore. Revenue from operations rose 17% YoY to Rs 6,185 crore in Q2FY19 on the back of strong passenger growth, the airline said. Domestic passenger traffic rose 32% YoY to 14.5 million between June-September 2018. Read the full report of IndiGo here: Plunging profits: IndiGo reports Rs 652-crore net loss
What brokerages say:
At least three brokerages expect the company to post a loss for the current fiscal year, said a Reuters report. Analysts at Citi forecast a net loss of about 10 billion rupees for the year. However, the brokerage still expects an improvement in the second half. Citi has cut its target price to Rs 720 from Rs 820 rupees earlier, but continued to rate the stock as “sell”.
Domestic brokerage Elara Capital expects margins to recover from fiscal year 2020 due to an anticipated slowdown in capacity addition by competitors. “We reiterate Buy rating on margins recovery from FY20 due to an anticipated slowdown in capacity addition by competitors, given their higher cost base versus INDIGO,” Elara Capital said in a note.
Elara Capital has rolled-over the target price to FY21E. “We lower our TP to Rs 1,083 from Rs 1,388 on lower margins after incorporating weaker INR, higher crude prices and lower FY21E EV/EBITDAR multiple to 8.0x (from 8.7x),” it added.