The way ahead for the IndiGo share price is a key aspect that the market is watching out for. All eyes are on how the cancelled flights and refunds processed would impact the earnings. Key international brokerages Citi and Morgan Stanley are, however, positive about the long-term prospects.
Here is a detailed analysis of the investment rationale for IndiGo now-
Citi Research on IndiGo
After the flight disruptions and the refunds processed by IndiGo, Citi Research continues to be positive. They are not too worried about near-term disruptions in operations. The brokerage house said that it expects normalisation to take place over the next 1 month, as the company undertakes remedial measures, given the extent of its operations. The brokerage firm maintained its ‘Buy’ stance on IndiGo, while keeping the target price unchanged at Rs 6,500, implying an upside of 19.6%.
“We do note that OTP (On Time Performance) has declined considerably across airlines, but given IndiGo’s more complex network, the disruption in any flight builds up faster and to a larger extent. The new FDTL also reduce the flexibility in rostering, and normalisation could take some time,” said Citi Research.
In IndiGo’s case, due to a very dense network (and hence stretched crew), a delay in a single flight could result in delays over subsequent departures. The new FDTL norms affect all airline operators, but again, lower redundancy could result in relatively higher impact for IndiGo.
Morgan Stanley on IndiGo
IndiGo is “Hitting a Rough Patch”; despite that, Morgan Stanley remained ‘OverWeight’ on the stock, with a target price of 6,540, an upside potential of up to 20%. But look, Indigo is not the only airline witnessing cancellations of flights; it’s just that it is seeing the largest impact. That is due to IndiGo’s large scale and ramp up in the second half of the current financial year (winter schedule, i.e., schedule for H2 FY26, shows Indigo domestic departures up 10% YoY but Air India + Al Express down 2%).
“IndiGo is seeing rising cost headwinds, but the entire industry will face these, and capacity is tight, so we expect air fares to rise gradually as a partial offset. Demand trends are improving, with November domestic PAX up 7% YoY vs -2% in F2Q26,” said Morgan Stanley.
All in all, Higher depreciation and finance costs drive sharper EPS estimate cuts. The brokerage house slashed F27 and F28 Earnings Per Share estimates by 20% each. Also, Morgan Stanley cut the EBITDA estimates by 1-4% over F26-28 as better yields partly offset higher staff and maintenance costs.
Indigo’s stock performance
The low-cost carrier’s share price has fallen 13.4% in the last five trading sessions. The stock has declined 12% in the past one month and 13.6% over the previous six months. However, IndiGo’s stock price has given a return of 9.6% in the past one year.