IndiGo shares climb over 5% after Q3 profit zooms 111% YoY. Should you buy or sell?

Shares of InterGlobe Aviation (IndiGo) climbed 5.6% to Rs 3,301.4 in Monday's trade on BSE after the airline reported a consolidated net profit of Rs 2,998 crore in the quarter ended December, which is up 111% from Rs 1,423 crore posted in the last year's quarter.

Revenue from operations during the reporting period increased 30% year-on-year (YoY) to Rs 19,452 crore.

For the third quarter, passenger ticket revenues rose 30% YoY to 17,157 crore and ancillary revenues were Rs 1,760 crore, showing an increase of 24% over the previous year.


"With these five consecutive quarters of profit we continue to recover from the losses of Covid and have now become net worth positive again," said the company's CEO Pieter Elbers.

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The company's EBITDAR (earnings before interest, tax, depreciation, and rent) jumped 61% YoY to Rs 5,475 crore. It was Rs 3,399 crore a year ago.

During the third quarter, IndiGo ferried 27.5 million passengers, which is a growth of 23% YoY. The load factor during the quarter improved by 85.8%.

Should you buy or sell IndiGo stock? Here's what analysts say:

Nuvama

Brokerage firm Nuvama retained its 'Buy' rating on IndiGo with a target price of Rs 3,774.

"IndiGo posted Q3FY24 EBITDAR of INR55bn (+61% YoY/2.2x QoQ), 22% above estimate. Growth is attributable to strong capacity addition, low ATF cost, and rise in yields, partially offset by the grounding of aircraft," Nuvama said.

"A likely duopolistic industry structure dominated by IndiGo and Air India bodes well. This shall spur pricing discipline, thereby driving yields up over the long term," it said.

Kotak Institutional Equities

Kotak Institutional Equities has a 'Buy' rating on IndiGo with a revised target price of Rs 3,700 (Earlier: Rs 3,300).

"IndiGo reported solid results, much ahead of our consensus estimates. Spreads increased meaningfully yoy and were close to the higher Q3 levels despite a deterioration in the CASK, excluding fuel. This reflects the breadth of the IndiGo network and positive sectoral tailwinds (more airports, government support for international travel, and India’s geographical location)," it said.

"The network advantage is here to stay for longer, but the P&W issue could disrupt operations. On the P&W issue, Indigo is well-prepared and has shared lower-than-anticipated grounding so far, Kotak said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)