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IndiGo shares at Rs 4,300? UBS, others revise stock price targets on InterGlobe Aviation post analyst meet

IndiGo shares at Rs 4,300? UBS, others revise stock price targets on InterGlobe Aviation post analyst meet

InterGlobe Aviation share price targets: Analysts have targets in the range of Rs 3,500-4,300 on the IndiGo stock, which suggests 7-31 per cent potential upside on IndiGo stock from the prevailing level.

Amit Mudgill
Amit Mudgill
  • Updated Mar 26, 2024 8:56 AM IST
IndiGo shares at Rs 4,300? UBS, others revise stock price targets on InterGlobe Aviation post analyst meetIndiGo share price: UBS said it has revised upward its target on the stock to Rs 4,000 from Rs 3,900. Despite factoring in higher crude prices and pilot salaries, its estimates are flat to higher driven by better ASK growth and yields.

A couple of brokerages, which attended InterGlobe Aviation Ltd (IndiGo) analyst meet held on March 22 in Gurgaon, said the airline remains bullish on long-term growth for the domestic air travel industry and sees domestic air travel to grow at a strong 15 per cent compounded annual growth rate over FY24-30E. A strong focus on international expansion continues and the airline operator as well as the domestic regulators believe India can become an important global hub for international travel, akin to Middle East. Analysts have targets in the range of Rs 3,500-4,300 on the stock, which suggests 7-31 per cent potential upside on IndiGo stock from the prevailing level.  

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IndiGo shared improving outlook for pricing for the March quarter -- up YoY versus the earlier flat YoY guidance. Its low double-digit ASK growth guidance for FY2025 full-year is comforting—suggestive that the 14 per cent YoY higher H1 summer schedule would also sustain in H2, when the base hardens (Go Air absent), Kotak Institutional Equities said.

UBS said it has revised upward its target on the stock to Rs 4,000 from Rs 3,900, as it continues to value IndiGo at 11 times FY26E EV/EBITDA. Despite factoring in higher crude prices and pilot salaries, its estimates are flat to higher driven by better ASK growth and yields. UBS said it continues to see upside risks to its yields estimates in the near term; and also to the capacity demand growth and profitability over the medium term.

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"New proposed pilot fatigue norms will have cost impact (which will be passed on to customers) and co. is currently in dialogue with regulators. We maintain our positive stance on Indigo considering strong growth prospects of Indian Aviation industry, share gains in international travel, efficient cost structure and operational excellence. We maintain Buy with revised price target of Rs 4,000 (Rs 3,900 earlier)," UBS said.

The analyst meet brought out why IndiGo believes it is big enough to chart its own growth trajectory, unperturbed by externalities, said Kotak Institutional Equities. The focus from hereon is to grow connectivity to have a larger share of international journeys and invest in systems and operations, it said.

"The near-term outlook is comforting on both ASK growth and pricing, reflective of IndiGo’s planning and strength of the underlying demand. BUY with a revised fair value of Rs 4,300 from Rs 4,200.

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InterGlobe Aviation highlighted its three-pillar strategy for growth: affordable fares, lower cancellations and on-time performance. It also seeks to enhance customer experience and invest in talent. INDIGO aims to significantly expand its international network.

"The management has also been making efforts to increase its global brand awareness. The stock is trading at 14 times FY26E EPS of Rs 238 and 7 times FY26E EV/ EBITDAR. We maintain our Neutral rating on the stock with a target of Rs 3,510 as we believe that IndiGo would have to navigate through various challenges in the near to medium term," Motilal Oswal said.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Mar 26, 2024 8:56 AM IST
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