IndiGo Q3 Preview: Revenue growth steady, profits seen under pressure as yields soften

IndiGo is expected to report a mixed set of numbers for the December quarter, with brokerages pencilling in steady revenue growth but a year-on-year decline in profitability as yields soften and cost pressures remain elevated.

According to an average of four brokerages, IndiGo's revenue for the third quarter is seen rising about 16% YoY, supported by continued capacity addition and resilient passenger demand. However, profit after tax is estimated to decline 17% YoY, reflecting lower fares, operational disruptions and higher fuel and forex-related costs.

Capacity, traffic and yields

Brokerages expect capacity growth to moderate during the quarter. Kotak Equities estimates an 8% YoY increase in available seat kilometres (ASKs), at the lower end of management guidance, partly due to mass flight cancellations in December. Load factors are expected to decline by around 150 basis points YoY to about 85.5%. Kotak also factors in a 3% YoY decline in yields, again at the lower end of the airline’s guidance.


JM Financial expects ASK growth of around 11% YoY, below earlier expectations, citing recent operational disruptions. Passenger yields are seen declining 3–4% YoY, in line with IndiGo’s revised PRASK contraction guidance. Motilal Oswal projects ASKs of 44.8 billion, up 10% YoY, with passenger load factor easing to 86.5% from 87% a year ago and revenue passenger kilometres rising 9.4% YoY.

Margins under strain

Margins are expected to compress sharply compared with last year’s strong base. Kotak Equities estimates RASK less CASK at Rs 0.38 per ASK for the quarter, sharply lower than Rs 0.76 per ASK in the year-ago period. The brokerage attributes this to softer yields and a slightly inferior cost structure, including higher pilot costs.

JM Financial highlights persistent cost headwinds, with aviation turbine fuel prices up 5.7% QoQ and the rupee depreciating around 2.1% QoQ. This is likely to result in forex losses of over Rs 9 billion for the quarter. As a result, the brokerage expects PBT per ASK of around Rs 0.65 and estimates quarterly PAT at roughly Rs 28 billion, implying a muted seasonal performance.

Outlook and strategy

Motilal Oswal notes that while average fares on one-month forward bookings remained flat QoQ at around Rs 6,110 during the quarter, fares on 15-day forward bookings rose 26% QoQ to Rs 7,194, indicating some late-booking pricing strength. Management’s strategic focus remains on international expansion, with the addition of new routes, networks and code-share agreements expected to support medium-term growth.

Overall, while IndiGo is likely to deliver healthy top-line growth in Q3, analysts believe profitability will be weighed down by lower yields, higher fuel and forex costs, and temporary operational challenges, making this quarter more subdued compared with recent periods.

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