Airline stock to buy now for an upside of more than 25%; ICICI Securities

InterGlobe Aviation Limited(doing business as IndiGo Airlines) is engaged in aviation management, hotel development, and management services. The company also works in passenger and cargo management and also offers travel distribution services, such as itineraries and domestic.

On Friday, the company’s stock closed at Rs 2,385.75 a share, with a market capitalization of Rs 91,981 crores. 

The company’s net profit improved by 154 % in Q4FY23 to Rs 919  crore from a loss of  Rs 1681 crore in Q4FY22. Furthermore, revenue from operations climbed by 76% to Rs 14,160  crore from Rs 8,020 crore in the previous year’s equivalent period.

On a YoY comparison of the metrics, the revenues significantly improved from  Rs 25,930 crores during FY 21-22 to Rs 54,446 crores in FY 22-23. For the same time period, The PAT numbers have shifted upwards, by 104 percent from a loss of  Rs 6,161 crores to a loss of  Rs 305 crores.

Having a positive outlook for the company, ICICI Securities gave a ‘Buy’ tag to the company with a target price of Rs 3,000 indicating an upside of 26  percent as compared to the current price levels. 

The rationale behind giving such a recommendation is

• As of April 23, IndiGo increased its market share to 56.8%. as per the DGCA’s statistics.
• IndiGo plans to increase its international ASK share from ~23% in FY23 to 30% over the next two years by adding additional international destinations.
• IndiGo resolved the GTF engine issue outstandingly by shifting from P&W to CFM in FY21.
• The company is able to maintain a Strong Domestic passenger daily trend count of more than 420k. 
• IndiGo’s financials have been further reinforced by an increase in free cash, which now stands at Rs 122 billion vs Rs 106 billion as of December 22 and a low of Rs 77.6bn as of Mar 22.

According to the latest shareholding pattern, promoters of the company hold a 67.86 percent stake, and Foreign institutional investors (FIIs) hold a 19.43  percent stake in the company for FY 22-23.

Written by  Omkar C