Shares of IndiGo’s parent InterGlobe Aviation plunged over 12% on October 28 after the airline reported a net loss of Rs 987 crore for the quarter ended September 30, 2024, compared to a net profit of Rs 189 crore for the same period. last year.

Despite revenue rising 14.6% year-on-year to Rs 17,759 crore, profitability was hit by fuel inflation and aircraft downtime costs. The shares traded at Rs 3,811.35 on the NSE after the results, marking IndiGo’s biggest one-day fall since February 2022.

Excluding foreign revenue, IndiGo’s net loss stood at Rs 746.1 crore, a considerable decline from the profit of Rs 806 crore recorded in the year-ago quarter. EBITDAR also saw a slight decline of 0.5 percent to Rs 2,434 crore. Operating costs jumped 21.9 per cent year-on-year to Rs 18,666.1 crore, led by an 11.8 per cent increase in cost per available seat kilometer (CASK).

Operational performance
Despite the challenges, IndiGo recorded growth in available seat kilometers (ASK) and revenue passenger kilometers (RPK), up 8.2 percent and 7.4 percent, respectively. However, the airline’s load factor decreased by 0.6 basis points to 92.6 percent, and revenue per available seat kilometer (RASK) saw a slight increase of 4.8 percent, while the yield increased by 2.3 percent to Rs 4.55 per kilometer.

Brokerages react: optimism remains
Kotak Institutional Equities maintained a positive stance, setting a target price of Rs 5,200, acknowledging the negative impacts of groundings and fuel costs, but highlighting strong demand prospects. Similarly, Goldman Sachs recommended a ‘buy’ with a target price of Rs 4,800, noting that IndiGo’s overall returns and passenger metrics were favorable, although higher CASK impacted results of the quarter. Conversely, Nuvama downgraded IndiGo’s rating to “hold”, citing competitive overcapacity concerns and changing valuation dynamics.

Pieter Elbers, CEO of InterGlobe, expressed confidence in IndiGo’s growth trajectory. “Despite headwinds, we are reducing costs associated with grounded aircraft and remaining focused on our international expansion,” Elbers said.

As IndiGo operates in a challenging environment marked by increasing costs and competitive pressures, its commitment to expansion, particularly in international markets, could ensure stable growth in the future.