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IndiGo stock price falls more than 10% after second quarter results. Buy, keep or sell?
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IndiGo stock price falls more than 10% after second quarter results. Buy, keep or sell?

Shares of IndiGo plunged over 10% in early trade on Monday after its parent InterGlobe Aviation reported a net loss of Rs 987 crore in the September 2024 quarter.

The shares crashed as much as 13 per cent on Monday, hitting a low of Rs 3,778.50. At 10:54 am, shares of the company were trading 7.66 per cent lower at Rs 4,030.35.

The loss, attributed to high fuel costs and disruption due to grounded planes, is in stark contrast to the profit of Rs 189 crore that the airline posted in the same quarter last year and the profit of Rs 2,728 crore of the June 2024 quarter.

Despite the decline in profitability, the company recorded a 14% year-on-year growth in its operational revenue, which stood at Rs 16,970 crore.

While the market had braced itself for a poor quarterly report, the actual numbers were more disappointing than expected. IndiGo noted that the second quarter is generally quieter, but challenges related to aircraft grounding and rising fuel prices have added to these pressures.

Jefferies, which retained a buy rating with a revised target price of Rs 5,100 (from Rs 5,225), highlighted the significant costs associated with grounded aircraft but expressed optimism about capacity improvements over the next few years. next quarters.

Even though current yields have been hit, Jefferies remains optimistic about growth in the medium term.

Kotak Institutional Equities, which also retained a buy recommendation but reduced its price target to Rs 5,200 from Rs 5,400, acknowledged IndiGo’s challenges related to aircraft grounding and seasonal factors.

However, Kotak noted the strong demand trends and investments made by IndiGo to strengthen future growth and profitability.

Meanwhile, Nuvama downgraded IndiGo to hold, setting a target price of Rs 4,415.

The brokerage cited near-term pressures of supply outstripping demand, affecting revenue per available seat kilometer (PRASK), and moderated its FY25 and FY26 EBITDAR estimates by 14% and 7%, respectively, due to lower yield prospects.

(Disclaimer: The views, opinions, recommendations and suggestions expressed by the experts/brokers in this article are their own and do not reflect the views of India Today Group. It is advisable to consult a qualified broker or financial advisor before making any real investment or trading decision.)

Published by:

Koustav Das

Published on:

October 28, 2024