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IndiGo shares fall 3% amid block deal buzz; see check target price, passive flow impact & more

IndiGo shares fall 3% amid block deal buzz; see check target price, passive flow impact & more

As much as 6 per cent stake in IndiGo-parent was sold in a block deal in the Thursday's session, with promoter and co-founder Rakesh Gangwal likely seeking a near complete exit.

Pawan Kumar Nahar
Pawan Kumar Nahar
  • Updated Aug 29, 2024 10:14 AM IST
IndiGo shares fall 3% amid block deal buzz; see check target price, passive flow impact & moreShares of InterGlobe Aviation Ltd tumbled nearly 2.97 per cent to Rs 4,714.90 on Thursday, with its total market capitalization close to Rs 1.8 lakh crore.

Shares of InterGlobe Aviation, the parent company of IndiGo, dropped nearly 3 per cent during the trading session on Thursday, on the back of heavy trading volumes amid the reported block deal by the co-founder and promoter entities Rakesh Gangwal and Chinkerpoo Family Trust.
 

As much as 6 per cent stake in IndiGo-parent was sold in a block deal in the Thursday's session, with promoter and co-founder Rakesh Gangwal likely seeking a near complete exit. More than 2.35 crore shares of the airline operator changed hands at a floor price of Rs 4,760 apiece, valuing the deal at more than Rs 11,100 crore as per BSE data.
 

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Amid the heavy trading volumes, shares of InterGlobe Aviation Ltd tumbled nearly 2.97 per cent to Rs 4,714.90 on Thursday, with its total market capitalization close to Rs 1.8 lakh crore. The scrip had settled at Rs 4,859.20 in the previous trading session on Wednesday.
 

However, Business Today could not independently ascertain the details of buyers and sellers, but some media reports indicated that Gangwal increased his selling to nearly 6 per cent stake for Rs 11,000 crore. Earlier, he was aiming to sell a stake valued at Rs 6,750 crore. Gangwal's stake sale is aligned with their broader guidance to gradually reduce his holding in the budget carrier.
 

The Gangwal-backed promoter group held a 19.38 per cent stake in InterGlobe Aviation as of June 30, 2024, while Rakesh Gangwal personally owned 5.89 per cent of the company as of the given date. This stake sale will also trigger a 150-day lock-in period before Gangwal can execute another tranche of the sale.
 

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"I don’t anticipate a significant price impact from passive flows, as the days' impact is low. Overall, the fundamental and quantitative momentum for IndiGo remains very strong, and the stock should continue to perform well," said Abhilash Pagaria Head - Nuvama Alternative & Quantitative Research.
 

Based on calculations by Nuvama Alternative & Quantitative Research, the free float is expected to increase to the maximum foreign float limit of 49 per cent. This float increase is anticipated to generate an inflow of approximately $35 million, translating to 6 lakh shares. The FTSE weight adjustment is expected to be minor, around $15 million, which equates to 3 lakh shares, it said.
 

Analysts are largely positive on IndiGo shares. A likely duopolistic industry structure dominated by IndiGo and Air India bodes well, they said adding that it may spur pricing discipline, thereby driving yields up over long term. Recently Jefferies gave a target price of Rs 5,225 on the stock. ICICI Securities has a 'buy' rating on the stock with a target price of Rs 5,265.

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: Aug 29, 2024 10:14 AM IST
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