IndiGo has quietly flown back into the spotlight. The country’s largest airline by market share announced its December quarter (Q3FY26) results on January 22.
InterGlobe Aviation, which operates IndiGo, reported an adjusted profit of around Rs 2,050 crore for the December quarter. Earnings before interest, taxes, depreciation, amortisation and aircraft rentals (EBITDAR) stood at Rs 5,860 crore, largely flat year-on-year. Meanwhile, earnings before interest, taxes, depreciation and amortisation (EBITDA), excluding foreign exchange loss, slipped about 2% year-on-year to Rs 6,470 crore.
Two major brokerage houses have reiterated positive views, even as they cut near-term estimates. Let’s break down what brokerages are saying and why IndiGo remains on their radar.
Motilal Oswal: Buy with 24% upside potential
Motilal Oswal has reiterated a ‘Buy’ rating on IndiGo, with a target price of Rs 6,100. This implies an upside potential of nearly 24% from current levels.
The brokerage believes the airline is entering a phase of moderated capacity growth, which could temper margins in the short term but bring stability later.
According to the brokerage report, “Due to capacity moderation, IndiGo is expecting a mid-single-digit growth in unit cost (ex. fuel and forex) for FY26.”
Capacity, measured through available seat kilometres (ASK), is expected to grow by about 10% in the March quarter, largely driven by international routes. However, revenue per available seat kilometre (PRASK) may soften slightly because of a high base last year, helped by Maha Kumbh-related travel.
Motilal Oswal highlighted this trade-off, adding, “Factoring in reduced capacity and the resultant lower margins, we cut our FY26E EBITDAR by 10%.”
The firm added, “We value the stock at 9x FY28E EBITDAR to arrive at our target price of Rs 6,100. Reiterate Buy.”
JM Financial: From ‘Reduce’ to ‘Add’
JM Financial has taken a slightly more cautious route but still sees value after the recent correction. The brokerage has upgraded the stock to ‘Add’ from ‘Reduce’, with a target price of Rs 5,420. This indicates about 10% upside.
The December quarter numbers fell short of JM Financial’s expectations due to higher-than-anticipated foreign exchange losses. According to the brokerage report, “IndiGo reported Adj. PAT of approx. Rs 2,090 crore in Q3, lower than JM Financial estimation of Rs 2,800 crore driven by higher forex loss of Rs 1,110 crore.”
JM Financial highlighted three key takeaways from the management commentary. First, ASK growth guidance for the March quarter has been moderated to 10% due to winter schedule curtailment. Second, PRASK is expected to decline in the mid-single digits year-on-year due to last year’s strong Maha Kumbh base. Third, unit costs excluding fuel and foreign exchange are likely to rise at a mid single digit pace in the financial year 2025-26.
The brokerage house further added, “CASK ex-fuel ex-forex expected to increase by mid-single digits YoY in FY26.”
The brokerage said it continues to value the company at its long-term average multiple, noting, “We continue to peg P/E multiple to long-term average of approx. 20x.” This valuation discipline is what led to the upgrade to an ‘add’ rating.
Conclusion
Brokerages believe IndiGo is going through a challenging but manageable phase rather than a structural problem.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.