Shares of InterGlobe Aviation (IndiGO) will be in focus on Thursday morning after the airline operator informed stock exchanges that it received orders from the Commissioner of Income Tax Appeals for the assessment year 2016-17 and 2017-18. A demand of Rs 739.676 crore for AY 2016-17 and Rs 927.03 crore for AY 2017-18 was raised
by the Assessing officer, against which the aviation company had preferred appeal before CIT-Appeal, IndiGo said in a BSE filing.
"The CIT-Appeal has now passed the respective orders, wherein the revision to the taxable income on account of tax treatment of certain incentives received by the Company from manufacturers with the acquisition of the aircraft and engine and disallowance of certain expenses has been confirmed without granting an opportunity of personal hearing and adjudicating the matter on merits," InteGlobe Aviation said.
The company will contest the same and will take appropriate legal remedies, InterGlobe said in a filing.
JM Financial in a recent note had expected IndiGo to report an improvement in Q3 profitability given revival in fares due to seasonally strong quarter, compensation of higher ATF prices. The March quarter, it said, is likely to be impacted from incremental aircraft grounding and increased lease cost due to higher demand in second-hand market for 12 new aircraft.
"3Q profitability is expected to improve given a) revival of PAX yields from November onwards b) Positive rub-off of higher ATF prices in terms of distance based ‘fuel charge’ charged from customers. Higher scale of operations in festive 3Q is likely to be partially offset by (a) higher ATF prices (b) P&W related aircraft groundings. Stock fairly priced at 8.3x EV/EBITDA FY25E," it said this month.
Post Q2 results, Emkay Global, cut its FY24 earnings per share estimate for InterGlobe Aviation by 6 per cent, on higher forex loss. It, however, remained constructive on IndiGo, given its strong ASK guidance, dominant position and robust order book, with some relief on fuel rates.
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