Shares of InterGlobe Aviation, the parent company of IndiGo, tumbled over 5% on Thursday mornings even as the country’s largest airline reported the highest-ever quarterly profit in the April-June quarter of the current fiscal. Shares of the low-cost carrier have been falling for the last four sessions and have fallen nearly 6% during the same period. The counter has been witnessing profit booking after hitting its all-time high levels of ₹2,745.95 on July 13, 2023.

Early today, IndiGo shares opened higher at ₹2,630, up 2.5% against the previous closing price of ₹2,565.75 on the BSE. The aviation stock, however, soon pared gains and dropped as much as 5.3% to ₹2,430.15. The index heavyweight has plunged 7.6% from the day’s high of ₹2,630. On the volume front, there was a surge in selling activities with 0.67 lakh shares changing hands over the counter compared to a two-week average of 0.15 lakh stocks, while the market capitalisation slipped to ₹95,190 crore.

IndiGo share price has fallen 11.5% from its highest level of ₹2,745.95 touched on July 13, 2023, while it trades 45% higher than its 52-week low of ₹1,676 touched on November 9, 2022. The aviation heavyweight has delivered 24.5% returns to its shareholders in the last one year, while it has risen 17% in the six month period. In the calendar year 2023, the largecap stock gained 20.5%, whereas it lost nearly 7% in a month and 4% in a week.

For the April-June quarter of FY24, IndiGo posted better-than-expected earnings that topped analyst estimates on both the top and bottom line front. After robust Q1, the Gurgaon- headquartered firm also announced its foray into venture capital to invest in aviation start-ups, subject to regulatory approval. The company will invest into startups operating in aviation, consumer and allied sectors such as travel & lifestyle, hospitality, and transportation. The company has received its board approval for incorporation of Limited Liability Partnership with an initial investment of ₹7 crore.

In Q1 FY24, IndiGo reported a record quarter with an all-time high net profit of ₹3,090 crore, aided by strong load factor coupled with a decline in fuel cost amid fall in crude prices. The airline had reported a net loss of ₹1,064.2 crore in the corresponding period of the previous year (Q1FY23). Sequentially, the profit zoomed 236% from ₹919.8 crore in Q4FY23.

The net revenue from operations climbed by 29.7% to ₹1,668.3 crore in Q1 FY24 from ₹1285.53 crore in the year-ago period, aided by high ticket prices and weak competition after the grounding of GoAir. The total revenue in Q1FY24 was up 31.8% to ₹1,176.09 crore compared to ₹1301.88 crore in Q1FY23.

As of June 30, the domestic air carrier has a fleet of 316 aircraft including 20 A320 CEOs, 166 A320 NEOs, 87 A321 NEOs, 39 ATRs, 2 A321 freighters and 2 B777 (damp lease). IndiGo operated 1,873 daily flights during the quarter including non-scheduled flights. During the quarter, the airline provided scheduled services to 78 domestic destinations and 22 international destinations.

Post Q1 results, analysts at Prabhudas Lilladher retained ‘Buy’ rating with price target of ₹2,855 per share. The brokerage believes that IndiGo is well placed to strongly benefit from capacity deployment, network expansion in domestic and international markets and superior balance sheet (₹15,700 crore of free cash). 

“Despite a record quarter, we cut our EBITDAR estimates by 7% each for FY24/FY25E as yields are witnessing higher pressure on sequential basis (as compared to past) while ATF prices have increased by 11% in last 2 months. We expect revenue CAGR of 15% over next 2 years with EBITDAR margin of 25.4%/28.1% in FY24E/FY25E,” says Jinesh Joshi, Research Analyst, Prabhudas Lilladher. 

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