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Aviation major IndiGo slipped back into the red, reporting a loss of Rs 987 crore in the second quarter ended September 2024
IndiGo Post Q2 Results: Buy, Hold or Sell? (Representative image)
Shares of Interglobe Aviation fell 10 per cent to intra-day lows of Rs 3929.50 on NSE today as the aviation major reported a loss of Rs 987 crore for the second quarter ending September 2024. This marks a significant decline from a profit of Rs 189 crore in the same quarter last year and a profit of Rs 2,728 crore in the preceding June quarter.
Revenue from operations, meanwhile, jumped 14 per cent year-on-year ( YoY) to Rs 16,970 crore in the reporting quarter.
In a traditionally weaker second quarter, the budget carrier said earnings were further impacted by headwinds related to groundings and fuel costs.
“We have turned the corner as the number of grounded aircraft and associated costs have started reducing,” said Pieter Elbers, CEO, IndiGo.
For the second quarter, the company’s passenger ticket revenues were Rs 14,359 crore, shown an increase of 10 per cent. Ancillary revenues rose 21 per cent YoY to Rs 1,875 crore.
IndiGo announced that it is on track to launch its business class in two weeks, aiming to offer a new experience to customers.
What Should Investors Do?
Goldman Sachs has maintained a “Buy” rating on Interglobe Aviation, but has reduced its target price to Rs 4,800. The investment firm noted that the company’s Q2 earnings per share (EPS) came in at Rs (25.7), while the profit before tax (PBT), excluding foreign exchange effects, was reported at Rs (17.3), both below Goldman Sachs’ estimates.
The reort also adds although available seat kilometers (ASK) and revenue passenger kilometers (RPK) were largely in line with expectations, yields exceeded estimates by 2.5 per cent, reflecting a 2.5 per cent year-on-year increase, compared to Goldman Sachs’ forecast of flat year-on-year growth.
Motilal Oswal has issued a report on Interglobe Aviation, maintaining a “Neutral” rating and setting a target price of Rs 4,130. The report notes that the company has reported a net loss attributed to seasonal factors; however, management’s guidance remains intact.
“Currently, over 60 aircraft are grounded due to Pratt & Whitney engine issues, with the management expecting this number to decrease to the mid-40s by FY26. The stock is currently trading at 10 times the estimated EV/EBITDAR for FY26,” the report adds.
Kotak Institutional Equity has released a report on Interglobe Aviation, maintaining a “Buy” rating while reducing the target price to Rs 5,200 from Rs 5,400. The report highlights a sharp earnings miss driven by aircraft on ground (AOG) effects, which are believed to have peaked, and heightened seasonality.
Despite this, demand trends remain healthy; however, weak pricing reflects a high base and increased competition. The firm emphasizes that there is a continued focus on investments to support growth and profitability in the long term.
Year-to-date, IndiGo shares have surged by 47.15 per cent, emphasizing the stock’s positive trajectory in the current calendar year. Looking back over the last twelve months, the stock has demonstrated significant growth, surpassing 79 per cent. These consistent positive returns underscore the stock’s strong performance and appeal to investors.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
