On Monday, Kotak maintained its Buy rating on InterGlobe Aviation Ltd. (INDIGO:IN), but lowered the price target to INR 5,400 from INR 5,700. The firm's analysis indicates that competitors of IndiGo are facing supply constraints, with the exception of the Air India-Boeing relationship, which may not last beyond December 2024. This situation has caused difficulties for IndiGo in the past six months.
According to Kotak, IndiGo is expected to recover large portions of its currently grounded aircraft fleet and improve its cost structure significantly, outweighing the potential loss of compensation from engine manufacturers. The financial year 2025 presents challenges in forecasting for IndiGo due to delays in Airbus deliveries and temporary cost issues related to Pratt & Whitney engines. However, the year 2026 may see an increase in airport fees due to higher aero yields at Delhi airport.
The revised fair value (FV) to INR 5,400, down from INR 5,700, still suggests a 25% potential upside for the airline's shares. The analyst noted that rising airfares represent a key upside risk for IndiGo's financial performance. Despite the cut in the price target, Kotak's outlook for the stock remains positive, with a Buy rating sustained.
InvestingPro Insights
InterGlobe Aviation Ltd. (INDIGO:IN) has been a topic of much discussion among analysts and investors alike. According to recent data and insights from InvestingPro, IndiGo has been identified as a prominent player in the Passenger Airlines industry. This distinction is crucial as it highlights the company's competitive position within the market.
InvestingPro Tips reveal that IndiGo has shown a high return over the last year, which may be an attractive point for investors looking for growth in their portfolio. Additionally, the company operates with a moderate level of debt, which could suggest a balanced approach to financing and potential resilience in the face of economic shifts. Furthermore, analysts predict the company will be profitable this year, which is consistent with Kotak's positive outlook on the stock.
InvestingPro Data metrics also highlight that IndiGo is trading near its 52-week high and at a high Price / Book multiple, indicating strong market confidence and possibly reflecting the company's robust financial health over the last twelve months. The airline's performance and these financial metrics can offer investors a more comprehensive view of its current market standing.
For those interested in further analysis and additional InvestingPro Tips on InterGlobe Aviation Ltd., you can find more information at https://www.investing.com/pro/INDIGO. There are 11 additional tips available, which could provide deeper insights into the company's performance and future prospects. To access these insights, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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