InterGlobe falls from grace, slumps below listing price

NEW DELHI: Shares of InterGlobe Aviation, promoter of IndiGo Airlines, have fallen below their listing price within three months of debuting on the bourses. The stock that saw a blockbuster IPO in October has seen a fall from grace like no other.

The stock became the darling of investors and analysts alike after its listing on November 11, but has fallen 63 per cent from its 52-week high of Rs 1,394 hit on January 1 to slip below its listing price of Rs 856. Its run has been exhilarating and exasperating at the same time.

The market cap of the stock has fallen by Rs 17,396 crore from a high of Rs 48,350 crore hit on January 1, 2016.

The stock has slumped 30 per cent from the day the company announced December quarter earnings on January 22. InterGlobe posted a 23 per cent jump in net profit. However, that was below Street estimates. Analysts concern over ticket pricing pressure, rupee depreciation negating lower oil prices and delay in delivery of A320neo aircraft also hurt the stock.

Less-than-expected earnings also led to a 8-10 per cent cut in target price for the stock by brokerages such as Citi Bank and Kotak Securities.

Brokerage firm Motilal Oswal Securities has cut its earnings estimates for InterGlobe after the Q3 numbers. “We cut our earnings estimate for FY2016 by 25 per cent to factor in the results of first nine months of FY16 and for FY17/FY18 by approximately 18 per cent to factor in delay in A320neo delivery, and a rise in employee cost and rentals,” the firm said.

With brokerages slashing their target prices and earnings estimates for the stock in the face of renewed challenges, one can't help but wonder if InterGlobe Aviation is becoming what Warren Buffet often called the aviation companies - "á death trap".