IndiGo Q1 result impact: Shares crack 11% as net profit plunges 97%

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Updated: July 31, 2018 11:11:02 AM

IndiGo shares: Shares of InterGlobe Aviation tanked over 11% to a 16-month low on Tuesday after the company posted a 97% plunge in its net profit for the first quarter ended June, 2018.

IndiGo shares: Shares of InterGlobe Aviation tanked over 11% to a 16-month low on Tuesday.

IndiGo shares: Shares of InterGlobe Aviation tanked over 11% to a 16-month low on Tuesday after the company posted a 97% plunge in its net profit for the first quarter ended June, 2018. Shares of InterGlobe Aviation, which runs the country’s largest domestic airline IndiGo, cracked 11.39% to a 52-week low of Rs 890.55 per share on the National Stock Exchange during morning deals on Tuesday. Remarkably, the drop was the biggest since March 2017. On the BSE, shares of the company fell 11.26% to a fresh 52-week low of Rs 891.10 per share.

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InterGlobe Aviation on Monday reported a steep 96.6% fall in net profit to Rs 27.8 crore for the first quarter of 2018-19, as compared to a net profit of Rs 811.10 crore posted in the same quarter of last fiscal. According to the Gurugram-based budget carrier, profits were hampered by an adverse impact of foreign exchange, high fuel prices, lower yields and higher maintenance cost.

The company’s sales from operations rose 13.2% to Rs 651.20 crore in the quarter, compared with Rs 575.29 crore in the year-ago period. Passenger ticket revenues stood at Rs 576.94 crore for the quarter under review, an increase of 13.6% over the year-ago period, and ancillary revenues rose 16% to Rs 68.27 crore. During the quarter, IndiGo added two new destinations — Hubli and Trichy — besides staring nine new routes.

What brokerages say

Motilal Oswal Securities has maintained a “neutral” rating on InterGlobe Aviation shares. “We remain confident on INDIGO’s execution capabilities and profitability focus. However, rising crude oil prices in a highly competitive and price-sensitive market will weigh on INDIGO’s profitability over FY19/20. Thus, we remain cautious on the stock,” Motilal Oswal said in a report.

Elara Capital has lowered price target to Rs 1,388 from Rs 1,606 with a “buy” rating and expects that IndiGo’s pricing power would return gradually during FY19 due to rising industry passenger load factor (PLF), Reuters said in a report. Of 19 brokerages covering IndiGo stock, eight have “buy” or higher rating, seven have “hold” while four have “sell” or lower, the report said.

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