IndiGo shares soar 7% to record high

Shares of InterGlobe Aviation, the parent of India's largest airline IndiGo, jumped as much as 7% to hit a fresh record high of ₹3,509 on the BSE.

This comes after brokerages turned bullish on the budget carrier. Foreign brokerage Jefferies raised the target price of InterGlobe Aviation to ₹3,435 from ₹2,500, aided by the airline's robust capacity growth guidance.

IndiGo, which cornered over 60% of the domestic market share, is expecting early double-digit growth in its capacity in the next fiscal. The Gurugram-based carrier is looking to add at least 1 aircraft every week. It currently has 366 aircraft in its fleet.

InterGlobe Aviation has gained 90% over the past year as the low-cost airline aims to double its size by the end of this decade. To fuel these ambitions, IndiGo placed a historic order of 500 new aircraft with Airbus, giving it a steady stream of deliveries between 2030 and 2035.

India remains an underpenetrated aviation market. The industry is expected to more than double in size from around 225 million passengers this fiscal to 510 million passengers by FY30, according to CAPA Research. Only 6.2% of Indians hold passports. Not surprisingly, over 30% of all aircraft orders in the calendar year 2023 came from Indian airlines.

India is geographically well-placed to have global aviation hubs like Singapore and those in the Middle East as 65% of the world population lives within 5-6 hours of flying time from India, IndiGo chief executive officer Pieter Elbers said last year. Comparing India's aviation market with China, Elbers says there are around 750 aircraft in India, for a population of about 1.4 billion. In China, with a similar population, there are around 3,500 aircraft, highlighting that India is still under-served in terms of aviation.

17-year-old IndiGo has one of the world's youngest aircraft fleets. It is the seventh largest carrier in the world in terms of daily departures and flies over 3 lakh passengers a day. It became the first Indian airline to carry 100 million passengers in the calendar year 2023, becoming one of the fastest airlines to achieve this milestone.

The airline expects to increase its employee headcount to 5,500-6,000 in FY25. In FY24, the airline added more than 4,500 employees, lower than its FY24 guidance of 5,000 employees.

InterGlobe Aviation reported better-than-expected earnings in the December quarter on the back of strong air travel demand and rising airfares. Its net profit in the December quarter grew 111% to ₹2,998.12 crore against ₹1,422.6 crore in the year-ago period. Revenue from operations surged 30.3% to ₹19,452.15 crore in the third quarter. The budget carrier's free cash has increased 133% in the last five quarters to ₹19,199.6 crore.

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