IndiGo up 4%: Motilal Oswal, Nuvama retain ‘Buy’ with up to 27% upside; Check target prices

 While the aviation major reported pressure on profitability due to foreign exchange losses and operational disruptions, brokerage houses continue to see long-term opportunities in the stock.

According to brokerage reports, both Motilal Oswal and Nuvama have maintained their positive stance on the airline, citing improving demand trends, better cost management and long-term growth opportunities in both domestic and international markets.

Brokerages see upside despite near-term challenges

The two brokerage firms have assigned different target prices to the stock, but both believe there is room for further gains from current levels.

Motilal Oswal on IndiGo

The brokerage house Motilal Oswal in its report noted that IndiGo’s earnings before interest, taxes, depreciation, amortisation, rent and foreign exchange adjustments (EBITDAR) fell sharply during the quarter due to higher foreign exchange losses. However, the airline’s operating performance remained relatively resilient.

“IndiGo managed its costs better than expected. Hence, it significantly beat our EBITDA estimates (ex-forex loss) of Rs 4,870 crore,” Motilal Oswal said in its report.

The brokerage noted that EBITDA, excluding foreign exchange losses, declined only 5% year-on-year despite a challenging operating environment.

As per Motilal Oswal report, the company has guided for available seat kilometre (ASK) growth of around 3-4% year-on-year in the first quarter of FY27 due to temporary disruptions in international operations following Middle East airspace restrictions.

However, the brokerage highlighted that passenger revenue per available seat kilometre (PRASK) is expected to improve significantly. “The Passenger Revenue per Available Seat Kilometer (PRASK) is expected to improve in the mid-teen range for Q1FY27,” the report said.

Aircraft ownership strategy in focus

A key area highlighted by management is its growing focus on aircraft ownership. The report added that IndiGo is using its strong cash position to increase direct ownership of aircraft instead of keeping excess cash idle.

“Management continues to view aircraft ownership as financially superior to idle cash due to better returns, lower financing costs, and reduced forex exposure over time,” Motilal Oswal noted.

The airline currently owns dozens of aircraft directly and has also announced an investment of $820 million in its Gujarat International Finance Tec-City (GIFT City) entity for aviation asset acquisition.

The brokerage also pointed to improving fleet availability. “Pratt & Whitney’s Aircraft on Ground (AOG) cases remain in the ’40s,’ with expectations to reduce to the ’30s’ by the end of FY27,” the report said.

Based on its estimates, Motilal Oswal expects revenue and EBITDAR to grow at a compound annual growth rate (CAGR) of 13% and 46%, respectively, between FY26 and FY28. It has reiterated a Buy rating with a target price of ₹5,600.

Nuvama on IndiGo: Sees recovery after a difficult phase

Nuvama also believes the worst may be nearing an end for the airline after a challenging FY26 marked by aircraft-related disruptions and geopolitical uncertainties.

“We feel Indigo is nimble-footed to navigate near-term headwinds and create long-term opportunities, replicating its domestic playbook in the lucrative international market,” Nuvama said in its report.

The brokerage expects earnings pressure to persist in the near term but sees conditions improving from the second quarter onward.

“We expect earnings to bottom in Q1 along with the stock. Expect recovery from Q2 as oil prices fall on easing geopolitical tensions,” the report added.

According to Nuvama, one of the biggest long-term opportunities lies in the airline’s growing international business. The brokerage believes IndiGo has successfully expanded its market share over the years and is now attempting to replicate that success in overseas markets.

Nuvama also pointed to easing supply-chain issues at aircraft manufacturer Airbus and engine maker Pratt & Whitney, which could help accelerate fleet additions in the coming years.

What investors need to watch

According to the brokerage reports, investors should keep an eye on international traffic recovery, fuel prices, fleet additions and the pace at which grounded aircraft return to service.

While near-term challenges such as fuel costs, foreign exchange fluctuations and geopolitical disruptions remain, both brokerages believe that improving operational efficiency, international expansion and fleet growth will be key factors shaping IndiGo’s performance over the next few years.

Disclaimer: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. The target prices and buy ratings mentioned above are sourced from brokerage reports and do not constitute direct investment advice or a solicitation from this publication. Investors are advised to consult a SEBI-registered investment advisor before making any financial decisions.

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