IndiGo’s parent, InterGlobe Aviation, is at the centre of the market conversation as the airline grapples with one of its toughest operational weeks in recent times. The airline has also lowered its guidance in terms of passenger revenue and capacity growth. Therefore, what’s the way forward for the stock now? Emkay Global has reiterated its positive view on the stock, projecting a nearly 27–30% upside from current levels.
IndiGo – What’s happened so far
The turning point came on December 10, when the Directorate General of Civil Aviation (DGCA), India’s aviation regulator, set up a dedicated Oversight Team at IndiGo’s Gurugram headquarters. The order, issued after days of passenger complaints and airport chaos, noted that the move was required “in view of passenger inconvenience caused due to large-scale disruptions in the operations of IndiGo Airlines at various airports across the country.”
Adding to the pressure, DGCA issued a notice on December 9 asking IndiGo to cut its planned Domestic Winter Schedule 2025 capacity by 10%
IndiGo lowers Q3FY26 guidance
The budget carrier in an exchange filing said that the financial damage cannot be fully quantified yet. However, it warned that its earlier guidance for the October–December quarter will need to be moderated. IndiGo now expects ASK growth to come down to “high single to early double-digit growth”, from the earlier “high teens” expectation. It also expects a “mid-single digit downward moderation” in passenger revenue per available seat kilometre (PRASK).
Despite the disruption, IndiGo reiterated that its operations have remained compliant with Flight Duty Time Limit (FDTL) norms, adding that this has been the case for “two decades.”
Emkay Global on IndiGo
Emkay highlighted that cancellations have come down, saying that operational stress eased with “relatively low approx. 530 cancellations on 8-Dec”, and the airline expected “normalisation from 10-Dec.” But the brokerage added that the situation remains fluid, especially with the government’s show-cause notice and DGCA’s ongoing investigation.
While the aviation regulator continues its probe and the government’s response is awaited, Emkay Global has attempted to quantify the damage. The brokerage noted that the “unprecedented crisis has led to over 4,200 cancellations for IndiGo in the past 8 days which is 23% of the 2,300 or more daily flights the airline was scheduled to clock in Dec-25.”
According to the report, the brokerage now builds in a 3% decline in revenue, 8% reduction in earnings before interest, taxes, depreciation and amortization (EBITDA), and 17% drop in profit before tax excluding foreign exchange impact for FY26. This assumption is based on a 2% hit each on volumes and passenger yields, along with higher cost per available seat kilometre (CASK).
Emkay added that “Indigo runs the risk of lost reputation and regulatory support” but also noted that its scale in Indian aviation means the situation could stabilize once operations normalize. The report further pointed out that the government may impose a penalty or ask IndiGo to compensate passengers, depending on the probe outcome.
Why Emkay sees over 27% upside for IndiGo
Despite trimming its valuation multiple from 23 times to 22 times, Emkay Global maintained its positive view and revised its target price to Rs 6,300. The brokerage summarised the evolving situation by saying that quick normalisation could revive momentum, even though “the situation is still evolving wrt GoI action, if any.”