InterGlobe Aviation shares drop as Q4 results disappoint. Here're new stock price targets

InterGlobe Aviation's March quarter results failed to meet analyst estimates on account of higher-than-expected fuel and employee costs. A few brokerages still raised their InterGlobe Aviation's earnings estimates for FY24 and FY25, citing rising Yield, pricing discipline and falling crude prices. The price targets for the stock suggest up to 22 per cent potential upside ahead.

InterGlobe Aviation is working to increase its international presence through strategic partnerships and loyalty programs and that its loyalty program subscriber base has increased 4.5 times from FY21 levels, one of the key highlights of the quarterly results. But the competition in the sector is expected to intensify with the resurgence of Air India and the entry of Akasa Air, analysts warned.

"We increase our revenue estimates by 12 per cent/17 per cent for FY24/FY25 because of the strong pricing trend being seen in ticketing revenue. We keep other estimates largely unchanged. The stock continues to trade above its preCovid levels. We reiterate our Neutral rating on the stock with a target of Rs 2,135 at 7.5 times FY25E EV/EBIDTAR," Motilal Oswal said in a note.

The stock fell 0.26 per cent to Rs 2,261.40 on BSE.

Nuvama Institutional Equities said that a likely duopolistic industry structure dominated by IndiGo and Air-India bodes well. In the near term, Robust demand along with growing international business to drive PAX growth for InterGlobe Aviation, it said. In the long term, XLRR fleet-adds and improved cargo business shall raise competitiveness, it said while revising its target on the stock by 8 per cent to Rs 2,703.

InterGlobe Aviation, which runs IndiGo, clocked a consolidated net profit of Rs 919.20 crore for the March quarter compared with a profit of Rs 1,422.60 crore in the December quarter and a loss of Rs 1,681.80 crore in the corresponding quarter last year. The profit figure, the best ever fourth quarter figure, was aided by strong market demand and forex gains, the airline said in a exchange filing.

InterGlobe Aviation's EBITDAR margin at 20.4 per cent fell short of Reliance Securities' estimate of 23.6 per cent due to high ATF prices, despite strong growth on the revenue front. Revenue growth at 77 per cent YoY was broadly in line with its estimates, due to better yield and healthy aviation traffic. EBITDAR margin stood at 20.4 per cent against its estimate of 23.6 per cent due to higher ATF prices. PAT at Rs 920 croe was far lower than Reliance Securities' estimated PAT of Rs 1,520 crore, due to subdued operating performance.

"Rising Yield, pricing discipline and falling crude prices would support turnaround despite other cost inflation. It is the best play to capitalise in the fastest-growing Indian aviation sector. We reiterate our BUY rating with an unrevised Target Price of Rs 2,750," the brokerage said.

InterGlobe Aviation said the profits of the third and the fourth quarters largely compensated for the losses incurred in the first and the second quarters of FY23.

Emkay Global raised its FY24 and FY25 PAT estimates by 40 per cent and 16 per cent, respectively, factoring in better spreads and vilumes.

"We also build in conservative fuel prices, that can surprise positively. Maintain BUY with a revised (up 4 per cent) Mar-25E DCF-based target of Rs 2,700," it said.

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