Shares of budget airline IndiGo’s operator InterGlobe Aviation were trading in the red today despite the firm reporting a multifold rise in profit for the quarter ended December 2022. Net profit zoomed eleven times in the third quarter, led by a pick-up in demand for air travel.
The airline’s profit came at Rs 1,422.6 crore in Q3 against a profit of Rs 129.8 crore in the year-ago period. However, financial services firm Motilal Oswal said the airline reported lower-than-expected profit. Revenue from operations rose 61 percent to Rs 14,932 crore in the third quarter as against Rs 9,294 crore a year ago.
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Total income jumped to Rs 15,410.2 crore in the third quarter of the current fiscal from Rs 9,480.1 crore in the year-ago period.
InterGlobe Aviation stock touched an intraday low of Rs 2045, falling 2.55% on BSE. However, the stock opened with a gain of 4.55% at Rs 2194 today. The large cap stock is trading higher than the 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages. The airline stock has gained 4.25% in one year and risen 2.55% since the beginning of this year.
Total 0.83 lakh shares of the firm changed hands amounting to a turnover of Rs 17.26 crore on BSE.
Market cap of the firm fell to Rs 79,444 crore on BSE.
The share hit a 52 week high of Rs 2,282.25 on February 10,2022 and a 52 week low of Rs 1,513 on June 20, 2022.
“Third quarter performance was strong both operationally and financially in the backdrop of robust demand for air travel,” said Chief Executive Officer Pieter Elber.
Financial Services firm Motilal Oswal said the airline reported lower-than-expected profit.
“InterGlobe Aviation (INDIGO) reported a lower-than-expected 3QFY23 profit after tax of Rs 14.2 billion led by higher-than-expected fuel and employee costs. Revenue passenger kilometers (RPK) were in line with our estimates at 24.5 billion. Passenger load factor (PLF) was higher at 85.1% with available seat kilometers (ASK) of Rs 28.8 billion (est. Rs 28.3 b) and yield at Rs 5.4 (est. Rs 5.3),”the brokerage added.
ICICI Securities is bullish on InterGlobe Aviation with target price raised to Rs 2415 against the earlier Rs 2360.
“InterGlobe Aviation (IndiGo) is benefitting from strong traffic, cost leadership in the industry and relatively benign competition. Its structural cost advantage is best defined through its fleet size of 302 aircraft with 238 neos (fuel efficient) and an average age of only 3.5 years. Its robust industry position is evident from its balance sheet with total free cash (net of debt) at Rs71 bn as of Q3FY23. Adjusted PAT of Rs20 bn for the quarter is a testimony to its vantage position. We remain positive on the supply-demand cycle, which will remain tight in medium term as per our analysis (link). Maintain BUY with a target price of Rs2,415 (earlier: Rs2,360) based on 25x (unchanged) FY24E EPS of Rs96.6 (earlier: Rs94.4). We have upgraded our earnings estimate which is reflective of more conviction in net spreads for the company. Risks include: commodity/currency-driven cost headwinds, and supply-chain issues leading to cost overrun, the brokerage said,” said the brokerage
Elara Securities has reiterated his buy call for IndiGo with a target of Rs 2,687
“INDIGO is operating at 105% of pre-Covid capacity. In terms of mix, 23% of INDIGO’s capacity is deployed in international market International capacity share expected to jump to 30% in FY24. On the domestic demand front, expect strong 20% demand growth in FY24E, due to 10% growth led by GDP (aviation demand growth is typically 2x of GDP growth) and 10% pent-up demand as FY23 industry demand was 10% lower versus pre-Covid level. The management expects INDIGO’s capacity to grow 15-20% in FY24, as it continues to add more destinations on domestic and international routes. With China reopening, international demand may likely be further boosted. INDIGO added 27 destinations in Europe, with the help of code share partnership, which is aiding growth, “added the brokerage.
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