IndiGo shares down 5% in a month; should you buy the dip?

Shares of InterGlobe Aviation Ltd, the parent company of IndiGo, were trading slightly higher in Monday's session. Last checked, the stock was up 0.55 per cent at Rs 5,291.10. At this price, it has shed 5 per cent in a month.

The stock has remained in focus following reports that InterGlobe plans to offload around 4 per cent stake via block deals, aiming to raise around $1 billion.

According to reports, the likely seller is Rahul Bhatia, co-promoter and managing director of InterGlobe. The move appears to be part of a broader promoter exit strategy, mirroring co-promoter Rakesh Gangwal's gradual stake reduction. Gangwal, who currently holds just 7.8 per cent in the airline, began trimming his holdings in 2022, offloading shares worth nearly Rs 40,000 crore.

This exit underscores a continued reduction in promoter influence over the airline they co-founded in 2006. As of now, InterGlobe holds a 35.70 per cent stake in IndiGo.

Despite the developments, a few analysts have recommended buying the stock on dips, citing it as a strong buying opportunity.

Investors should look to accumulate IndiGo shares on every dip as they present a strong buying opportunity, said Dharmesh Kant, Head of Equity Research at Cholamandalam Securities, in an interaction with Business Today.

IndiGo can be considered for portfolio addition as charts suggest the stock is showing strong momentum, said Vaishali Parekh, Vice-President – Technical Research at Prabhudas Lilladher.

The airline's stock has a price-to-earnings (P/E) ratio of 33.55 against a price-to-book (P/B) value of 54.57. Earnings per share (EPS) stood at 157.18 with a return on equity (RoE) of 162.65.