IndiGo shares hit all-time high as Q3 beats estimates

Shares of Interglobe Aviation, which owns and operates airline IndiGo, jumped over 5% in opening trade on Monday after the carrier reported better than expected earnings in the December quarter on the back of strong air travel demand and higher fares.  The share price of the domestic carrier touched a new all-time high of ₹3,301.40 today, amid a sustained rally for the last six sessions, rising more than 15% during this period.  

Continuing its gaining streak, IndiGo shares opened higher at ₹3,219.95, up 3% against the previous closing price of ₹3,127 on the BSE. In the first hour of trade so far, the aviation stock surged as much as 5.6% to ₹3,301.40, while the market capitalisation rose to ₹1.26 lakh crore.

At the current level, shares of IndiGo have risen 82% against its 52-week low of ₹1,810.45 touched on March 28, 2023. In the last one year, the counter gained 58%, while it added 29% in six months and 11% in a month.

IndiGo, the country’s largest airline in terms of passengers carried and fleet size, released its December quarter earnings post market hours on Friday, reporting 111% growth in net profit at ₹2,998.12 crore against ₹1,422.6 crore in Q3 FY23. The revenue from operations surged 30.3% to ₹19,452.15 crore versus ₹14,933 crore in the year ago period.

“With these 5 consecutive quarters of profit we continue to recover from the losses of Covid and have now become net worth positive again…This series of profitable growth is attributable to the confidence shown by passengers who chose to fly with us. We are grateful for our customers’ confidence and our thousands of employees who continue to put their best foot forward each day to serve them,” says CEO Pieter Elbers.

The Gurugram-based low-cost carrier’s Earnings Before Interest, Taxes, Depreciation, Amortisation, and Restructuring or Rent Costs (EBITDAR) grew 61% to ₹5,475 crore in Q3 FY24, from ₹3,399 crore in the same period last fiscal.

The company’s balance sheet was healthy with a total cash balance of ₹32,428 crore, comprising ₹19,199.6 crore of free cash and ₹13,228.5 crore of restricted cash as of December 31, 2023. The capitalised operating lease liability was ₹44,556.5 crore, while the total debt was ₹51,187.5 crore.

As of December 31, 2023, IndiGo had a fleet of 358 aircraft including 31 A320 CEOs (11 damp lease), 184 A320 NEOs, 94 A321 NEOs, 44 ATRs, 3 A321 freighters, and 2 B777 (damp lease) at the end of December quarter of FY24. During the quarter the carrier added 23 passenger aircraft and 1 freighter.

Post Q3, domestic brokerage Prabhudas Lilladher has given an “Accumulate” rating on the stock with a target price of ₹3,053, which has already been breached today. IndiGo posted strong Q3, which beat our and street estimates, says Jinesh Joshi, Research Analyst at the brokerage firm, adding that the airline “currently trades at EV/EBITDAR multiple of 10.3x/8.0x our FY24E/FY25E estimates”.

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