InterGlobe Aviation Ltd. share price target

We expect IndiGo to register Rs3bn/Rs23bn PBT (ex-forex impact) in Q4FY23/FY23. Profits are highly sensitive to yields which is the key upside/downside risk to our estimates. However, IndiGo remains well placed to benefit from strong systemic demand and its leading competitive positioning.

We attended InterGlobe Aviation’s (IndiGo) analyst meet held at its iFly Training Centre (Gurugram) on 23rd Mar’23. The airline remains focused on growth (>15% ASK growth in FY24, doubling the fleet by 2030) and internationalisation (increase ASK mix to 30% over next two years from 23% in 9MFY23).

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 238neos (fuel efficient) and an average age of only 3.5 years.

Dec’22 average daily PAX for Indian airlines stood at 417k (similar to pre-covid levels). Average ATF prices were lower by 8% QoQ in Q3FY23. Domestic load factors are increasing with a trend of 78%, 81%, 82% and 87% for IndiGo from Aug’22 to Nov’22, respectively.

InterGlobe Aviation (IndiGo) is benefitting from strong traffic and benign competition while cost pressures remain high. The commentary on fares/traffic is also very strong.