IndiGo, India’s largest airline, has seen a rally in its stock price over the past month, gaining nearly 13%. The momentum continued in today’s trading session, with the stock climbing over 2% to trade around Rs 5,102, inching closer to its 52-week high of Rs 5,190.35.
The bullish sentiment comes on the back of IndiGo’s investor presentation, where the airline outlined its expansion plans. The company aims to add one aircraft per week until 2030, taking its fleet to over 600 aircraft. In addition to it, it plans to increase its international capacity share from 25% to 40% and introduce wide-body aircraft from FY25 to tap into long-haul routes.
But does this mean the worst is over for IndiGo? Here’s what Nuvama and Jefferies say about the stock.
Jefferies On IndiGo: Key factors supporting share price
The leading brokerage Jefferies has taken a more bullish stance, reiterating a ‘BUY’ rating on the stock.
The brokerage firm, Jefferies has raised its target price for IndiGo to Rs 5,700 from Rs 5,300, maintaining a bullish stance on the airline. The brokerage expects a strong Q4FY25 and steady capacity growth in FY26, backed by international expansion and a robust fleet strategy. It values IndiGo at 10x FY27E EV/EBITDA, implying a 25x FY27 PE.
According to Jefferies, Available Seat Kilometers is likely to grow over 20% YoY in Q4, while Passenger Revenue per Available Seat Kilometer could be better than earlier expectations.
Jefferies highlighted IndiGo’s financial position, stating that “IndiGo’s free cash position has ballooned to Rs 289bn as of 3QFY25 end”, giving the company flexibility to invest in growth while managing risks. In addition to this, “Indigo Ventures will enable innovation in aviation or allied services, and the Co will be deploying Rs 3 billion over the next 3-4 years through this entity.”
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The brokerage has made slight adjustments to its EBITDA/PAT estimates for FY25/FY26 while “raising FY27 PAT estimates by 13% to account for lower taxes, as Co could continue to benefit from carry-forward losses.”
The brokerage also noted potential upside risks if crude oil prices remain weak, stating, “We are currently factoring ~USD80 crude in our estimates and may have upside risk to estimates if current weakness in crude continues.”
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