IndiGo, whose December quarter results were marred by foreign exchange losses, remained on the buy list of UBS and Goldman Sachs, even as the two brok
IndiGo, whose December quarter results were marred by foreign exchange losses, remained on the buy list of UBS and Goldman Sachs, even as the two brokerages differed on the price target for the airline’s stock.
UBS has raised the 12-month price target for IndiGo’s shares to Rs 5,400 from Rs 5,300. This implies an upside of nearly 30% against the current market price.
“We maintain our ‘Buy’ rating with a revised price target of Rs 5,400 (Rs 5,300 earlier) as we expect robust demand growth to continue, and the duopolistic nature of the Indian aviation industry bodes well for pricing and profitability in the long term,” it stated.
Meanwhile, Goldman Sachs has lowered its 12-month price target on IndiGo’s stock from Rs 4,800 to Rs 4,650. The revised target suggests an upside of 11.7% against the current market price.
The brokerage said it is reducing its fiscal 2026 and fiscal 2027 earnings per share estimates for IndiGo by 5% and 6%, respectively, as it takes into account the latest rupee-dollar conversion rate and jet fuel prices. “…we do not assume a compensatory yield improvement, given management commentary around competition in international,” it said.
Notably, IndiGo operator InterGlobe Aviation Ltd. posted an 18% year-on-year decline in its consolidated bottom line for the quarter ended December due to foreign exchange losses. The net profit slipped to Rs 2,448.8 crore, primarily due to the carrier incurring a foreign exchange loss of Rs 1,456.4 crore.
“While the near-term earnings could be impacted by higher oil prices and rupee depreciation, we believe that Indigo’s competitive positioning is strengthening, with other airlines struggling to add capacity,” Goldman Sachs said.
As compared to IndiGo, other carriers are likely to have a “more severe impact on profitability” due to forex jitters and volatility in the crude market, it added.
UBS, in its note, described IndiGo’s third quarter financial performance as strong but “marred” by forex impact. The outlook for the carrier remains “robust,” it said, adding that the net profit, excluding the forex losses, grew 28% year-on-year.
To mitigate the impact of forex volatility, IndiGo is planning to focus on dollar hedging and international expansion. “We have a couple of strategies in place. One of them, clearly, is the hedging of dollars. The other one, importantly, and that links to one of the strategic priorities, is to further increase our international footprint,” Pieter Elbers, the airline’s chief executive officer, told NDTV Profit in an interview.
Shares of IndiGo’s parent company closed 0.7% higher at Rs 4,162.25 apiece on the NSE on Friday, ahead of the results, as compared with a 0.5% decline in the benchmark Nifty.
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