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Business News/ Market / Stock-market-news/  IndiGo shares fall 11.17% as Q1 earnings dip

IndiGo shares fall 11.17% as Q1 earnings dip

IndiGo shares touched a low of Rs860.25 apiece, suffering the worst fall in five months, after analysts downgraded the stock and cut its price target

InterGlobe Aviation Ltd that runs IndiGo posted a net profit of `591.77crore, down 7.3% from `638.89crore a year ago. Photo: Reuters Premium
InterGlobe Aviation Ltd that runs IndiGo posted a net profit of `591.77crore, down 7.3% from `638.89crore a year ago. Photo: Reuters

Mumbai: InterGlobe Aviation Ltd, that runs IndiGo, on Tuesday fell 11.17%—its steepest fall in five months—after most of the analysts downgraded the stock as the airline company posted weaker than expected earnings.

The stock touched a low of 860.25 a share, a level last seen on 23 March, and fell as much as 11.7%, the maximum fall since 22 January. So far this year it fell 29.89%.

Ambit Securities, Motilal Oswal, Kotak Securities downgraded the stock and also cut its price target.

The company posted a net profit of 591.77crore, down 7.3% from 638.89crore a year ago. Revenue rose 9.7% to 4,741.45 crore from 4,322.24 crore a year ago.

“We cut our FY17/FY18 EPS by 7% primarily led by 2% cut in our yield assumptions as we believe that Indigo’s new stance to respond actively to competitor’s pricing could result in sacrificing profitability in the near term", broking firm Motilal Oswal said in a note to its investors.

The company is considering slowing deliveries of the single-aisle aircraft to give supplier Pratt & Whitney more time to upgrade the model’s engines. It may seek the delivery slowdown “to allow Pratt & Whitney to catch up on the production of upgraded engines," InterGlobe Aviation Ltd., which operates the airline, said in its first-quarter financial statement.

Also Read: Competitive pricing pressure clips IndiGo’s wings

“The company reported poor 1QFY17 performance, with EBITDAR and PAT declining by 3% and 7% year-on-year, respectively, led by 8% decline in yield. The management cited high competitive intensity in the industry pressurizing yield, and is expected going forward to protect volumes," Kotak securities said in a note to its investors.

Motial Oswal has downgraded the stock to neutral and kept its target price to 1,057 a share, Ambit Securities has downgraded it to sell and reduced its target price by 14% to 890 a share, Kotak Securities has downgraded it to add from buy earlier and revised its target price to 1,020 a share from 1,200.

Of the analysts covering the stock, six have a “buy" rating, four have a “hold" rating, while five have a “sell" rating, shows Bloomberg data.

Rival airlines Jet Airways India Ltd fell 5.19% to 576.80 while SpiceJet fell 3.99% to 62.55.

Also Read: Indigo Q1 profit declines 7.3% to Rs591.77 crore on cheaper fares

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Published: 02 Aug 2016, 02:09 PM IST
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