The international brokerage house, Jefferies, has slashed the target price and earnings estimates on IndiGo after the operational rout caused by Flight Duty Time Limitations (FDTL) guidelines. However, it maintained the ‘Buy’ rating on the stock.
The stock price is expected to reach Rs 6,035 over the next 12 months, a cut of 16.4% from its earlier price target of Rs 7,025.
Jefferies on IndiGo: FY27, FY28 EPS estimates slashed
The new target price still looks at an upside of 26% from the current market price. The EPS estimates were slashed by 13-53% for FY26-FY28. Recently, IndiGo cut its near-term guidance due to recent business disruptions.
IndiGo revised its Capacity (Available Seat Kilometres) guidance for Q3 FY26 between high-single and early-double-digit growth, compared to high-teens growth guidance given previously. Also, the company guided for negative mid-single digit YoY for unit revenue growth, as against flat or slightly positive growth guided earlier.
Lowering of guidance is indicative of recent disruption & trimming of domestic departures for winter schedule (starting December) post order from DGCA. “We believe the trajectory for FY27 would be anchored over timely fleet induction & equally critical pilot sufficiency, as recent disruptions have highlighted crew availability as a key constraint,” said Jefferies.
“Operational scale-up from here hinges on timely fleet induction & pilot sufficiency,” it said.
Jefferies on IndiGo: The long-term potential
All in all, the reason behind maintaining the ‘Buy’ call on the stock was on the back of the company’s strong track record, disciplined growth strategy, and international expansion. Plus, the recent correction in the stock price factors in the disruption of peak season.
However, over the long term, the brokerage sees that the impact on reputation will depend upon how easily and quickly IndiGo is able to get out of the situation. Past industry experience also suggests customers tend to revert quickly once schedules normalise, especially in markets with limited alternatives. Thus, highly unlikely to become a major long-term issue.
InterGlobe Aviation stock performance
The share price of IndiGo has fallen 6.5% in the last five trading sessions. The stock has 16.5% in the previous one month and 11.7% in the last six months. Yet, IndiGo’s stock price has raised investors’ wealth by 8.4% over the past one year.