Indigo Stock Fails To Take-off Despite Record Q4 Earnings; Brokerages Bullish
Emkay, Nuvama and Morgan Stanley shared the buy recommendation with increased target price
The stock of Interglobe Aviation (Indigo) smashed more than 2 per cent in the Friday trading session despite the robust fourth quarter earnings posted by the major Indian airline.
Indigo stock was unable to take-off and traded at Rs 4,290 with 2.5 per cent loss in the afternoon trading session on the National Stock Exchange (NSE).
While Indigo clocked record top line and bottomline in the fourth quarter ended 31 MArch 2024, the airline also unveiled its business further business plan to foray into the new category. Besides this, brokerage houses also shared their analysis for the firm and its stock.
Q4 Earnings
InterGlobe Aviation, the parent company of IndiGo, on Thursday declared record profit of Rs 8,172 crore for the fiscal year 2024.
The airline also reported a net profit of Rs 1,894 crore for the fourth quarter, marking its sixth consecutive quarter of profitability.
For the quarter ended March 2024, IndiGo reported a net profit of Rs 18,948 million, more than doubling its previous year's profit of Rs 9,192 million for the same quarter.
The annual net profit for FY24 stood at Rs 81,725 million, an increase compared to the previous fiscal year, underscoring the airline's robust financial health and operational efficiency.
Brokerages Bullishness
Morgan Stanley shared an "overweight" call on IndiGo with an increased target price of Rs 5,142 per share. The airline exceeded Q4 EBITDA projections by 10 per cent, according to the brokerage. But given the increasing impact of inflation, the company anticipates flat revenue per available seat kilometre (RASK) year over year (YoY).
Jefferies maintained a "hold" call on IndiGo, however it increased the target to Rs 4,150 a share. With yields rising by a strong 7 per cent YoY, the Q4 performance was outstanding and cost challenges were mitigated.
Due to advantageous yield and spreads, the company is still benefiting from a capacity-constrained environment. Still, Jefferies beleived these favourable aspects are already taken into account by the stock's outstanding performance.
Emkay Global analysts noted that although the AoG scenario is still range-bound in the mid-70s, Indigo's management has guided for Q1FY25 capacity increase of 10 to 12 per cent YoY each. Brokerage maintained a ‘buy’ recommendation of the stock with a Rs 5,000 target price.
Nuvama maintained a 'buy' rating on the stock and increased the target price by 21 per cent to Rs 5,192, stating that IndiGo has among the best aircraft utilisation levels despite being primarily domestic focused.
Business Plans
In conjunction with the corporate earnings, IndiGo revealed plans to introduce a bespoke business class product tailored for India's busiest and most business-centric routes.
This move aimed to redefine business travel in India, reflecting the country's booming economy and the rising aspirations of its society.
"As India's most preferred airline, we are constantly innovating our service offerings for our millions of customers. Over the past 18 years, the growth stories of India and IndiGo have been closely intertwined," Pieter Elbers, CEO, IndiGo.
Stock Performance
Although the airline Q4 earnings was not rewarded on Dalal Street, the stock performance has done fairly well in the year 2024 so far. Indigo stock has displayed a massive rally of more than 42 per cent year-to-date (YTD) beating all the benchmark indices and its peers.
