InterGlobe Aviation Ltd. share price target

Going ahead, led by festive and improvement in slot allocation we expect aircraft utilization and profitability to improve. We remain constructive on long growth story given its market leadership position, aggressive capacity addition and strong balance sheet....

While IndiGo's 2QFY20 results have disappointed, we believe that (1) The carrier will benefit from improving industry dynamics in the medium term as the airline enjoys a dominant market share of ~48% (2) Crude prices remain benign which will allow for better cost management (3) Further, valuations at current levels (6.6/4.8x FY21/22E EV/EBITDAR) are undemanding. The multiples are impacted due to the ongoing dispute amongst the two promoters. Any resolution of the above will lead to a re-rating of the stock. IndiGos 2QFY20 results were significantly below expectations (loss of Rs 10.6bn) due to increased operating expenses. We are reducing our EBITDAR estimates by ~20% over FY20-22 to factor in the above. Maintain BUY with a revised TP of Rs 1,610 (6x Sep-21 EV/EBITDAR). The sharp correction in the stock is pricing in the weak results.

25 October 2019 INDIGO reported a yield of INR4.0 (in-line) for 2QFY20. However, RPK of 20.2b came in below our estimate of 21.4b, resulting in net sales of INR81.1b (+31% YoY) a miss of 8%. EBITDAR was down 13% YoY to INR0.97b, led by a forex loss of INR4.5b (relating to mark-to-market due to capitalization of operating lease liabilities) and accrual of additional rental cost of INR3.2b on account of reassessment of supplementary rentals. Forex loss was at INR4.5b (v/s a loss of INR3.4b in 2QFY19 and a gain of INR0.4b in 1QFY20). The company reported a net loss of INR10.

We have increased our earnings estimates over FY20/21E by 11/3% to factor in the higher yield assumptions. We are lowering valuation multiples to factor in the recent differences between promoters. Retain BUY, but quick resolution will help further rerating, given favourable competitive dynamics. Helped by lower competition in 1QFY20, INDIGOs yields increased sharply (+13.7/10.8% YoY/QoQ), driving revenue growth of 45/20%. Our estimates rise to bake higher efficiencies, with market share now ~50%. However, friction between promoters will weigh on investor confidence. Valuation multiples will remain constrained, meanwhile. Our revised TP is Rs 1,785 (6x FY21E EV/EBITDAR vs 8x earlier).

20 July 2019 INDIGO reported Ind-AS 116-based quarterly results. Yield for the quarter was in line with our estimate at INR4.55, leading to 45% YOY increase in net sales at to the transaction impact of Ind-AS 116 lease and supplementary expenses were replaced by depreciation (on ROU asset recognized) and finance charges (finance lease liability). Forex gain was at INR446m (v/s loss of INR2,461m in 1QFY19 and gain of INR105m in 4QFY19). PAT came in at INR12.0b (v/s our cost was higher by 70% YoY at INR11.1b owing to salary increments and new pilots hiring (currently under training). ASK increased 31% YoY to 23.3b. The company added ~18 new planes during the quarter and expects delivery of first leap of A320neo next year. RPK in 1QFY20 increased by 30% YoY at 20.7b, with RASK at INR4.04 the highest since 1QFY16. Also, cargo revenue increased significantly as INDIGO has increased the range of its cargo products.

the last one year. Promoter Rakesh Gangwal RG' with 37% stake in Indigo has asked for SEBI's intervention. Point of contention by RG are corporate governance issue, related party transactions (RPT) between Indigo & IGE group (IGE is controlled by...

Given its market leadership position, aggressive capacity addition and strong balance sheet, we maintain our positive view. We value Indigo at a P/E multiple of 23x (20x earlier) on FY21E given...

Seasonally strong 1QFY20, profitable expansion into international markets and strong focus on efficiency drive further upside. We have tightened our load factor and yield assumptions resulting in our EBITDAR for FY20/FY21E improving by 8.9/13.8% to Rs 105.1/144.2bn. In the medium term, we need to track impact of industry capacity addition on pricing and load factors. Oil remains a big variable. We continue to rate INDIGO a BUY post stronger than expected 4QFY19. Seasonally strong 1QFY20 at a time when industry capacity is low augurs well for the carrier. Profitable expansion into international markets and strong focus on efficiency drive further upside. Our TP is raised to Rs 1,846 (8x FY21E EV/EBITDAR).

We maintain BUY with a TP of Rs 1,280 (+15.6%) based on 8.0x Dec 20E EV/EBITDAR. Driven by a 27.8% YoY increase in RPKMs and a 4.5% YoY increase in yields, INDIGO reported a 28.1% YoY increase in 3QFY19 revenue to Rs 79.2bn (+7.2% vs. expectations, driving the beat). Despite revenue growth INDIGOs adj. EBITDAR plummeted 17.6% YoY to Rs 16.0bn as unit fuel costs remained elevated at Rs 1.58 (+27.3%/1.4% YoY/QoQ), while unit non-fuel costs at Rs 2.14 increased 3.6%/-6.5% YoY/QoQ. RPAT at Rs 1.9bn came in much ahead of our estimate of a loss of Rs 2.5bn.

23 January 2019 After a long time, pricing pressure in the 0-15 day ticketing window appears to have eased resulting in ticket yield rising 3.7% YoY to INR3.83. Fuel cost per ASK increased by 27% YoY. However, increase in yield resulted in EBITDAR margin rising from a six-year low of 1.8% in 2QFY19 to 20.2% in the quarter (31.3% in 3QFY18). Management has guided for ASK growth of 34% YoY in 4QFY19. Growth in domestic passengers has been lagging industry-wide capacity addition. This is expected to keep yields under pressure going forward. CASK increased 14% YoY to INR3.58, while CASK ex fuel increased 5% YoY to INR1.98. For 9MFY19, PAT stands at a loss of INR4.