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Interglobe Aviation’s share price added 1.1% in early trade on Monday as the IndiGo airline operator reported a net profit for the second straight quarter – for the January-March quarter, compared to a net loss for the same period in the fiscal year 2022. The stock price touched a high of Rs 2,293.45, which is around Rs 40 lower from its 52-week high of Rs 2,332.95 per equity share. Analysts were positive on the stock outlook, with several recommending a ‘buy’ on IndiGo stock.
Should you buy, sell or hold Indigo stock?
Emkay: Buy
Target Price: Rs 2,700 | CMP: Rs 2,264.7 | Upside: 19.2%
“Indigo reported consecutive quarters of profit in Q4FY23 and performed well on unit metrics and pax, while PBT of Rs9.2bn missed our est. by 22%. It was the 3% higher-than-expected ASK at 30.4bn that led to increased absolute expenses and lower RASK (3% miss). Pax volume rose 5% QoQ, despite Q4 being a lean quarter, while yields at Rs4.85 reported a 3% beat. The management has maintained its key FY24 guidance, with AOGs continuing in the 35-40 range.
However, we believe targets would be beaten, given peer issues amid strong air traffic recovery. Management stated yields and PLFs would likely increase QoQ in Q1FY24. We raise our FY24/25E PAT by 40%/16%, factoring in better spreads and vols. We also build in conservative fuel prices that can surprise positively. Maintain buy with a revised (up 4%) Mar-25E DCF-based TP of Rs 2,700.”
Prabhudas Lilladher: Buy
Target Price: Rs 2,565 | CMP: Rs 2,257 | Upside: 13.6%
We increase our FY24E/25E EBITDAR estimates by 7%/8% amid sustenance in yields, given recent competitive development and stable fuel costs. InterGlobe Aviation (IndiGo) reported strong performance with revenues of Rs 142 billion (PLe Rs 135 billion) and an EBITDAR margin of 18.7% (excluding FX gain of Rs 2.5 billion) aided by lower fuel CASK of Rs 1.85. We believe IndiGo is well placed to strongly benefit from 1) demand recovery along with capacity deployment (aiming for a fleet size of 350 in FY24E), 2) network expansion in domestic as well as international markets (30 new destinations already added in 4QFY23) 3) superior balance sheet (Rs 122 billion free cash) and 4) possible market share/yield gains that could accrue from grounding of one of the competitors. We expect revenue CAGR of 12% over next 2 years backed by fleet addition and sustenance in yields with EBITDAR margin of 25.5%/28.5% in FY24E/FY25E. Retain BUY with a TP of Rs2,565 (EV/EBITDA multiple of 7x EV/EBITDA Dec-24E; no change in target multiple).
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