Home/ Markets / Stock Markets/  Brokerage sees 37% upside in Interglobe Aviation stock. Do you own it?

InterGlobe Aviation, which operates airlines IndiGo is expected to perform well with its dominant position, low-cost leadership, and running order book of 487 aircraft. Brokerage Emkay Global believes the carrier is ‘best-positioned to capture the sectoral drivers’ ahead. 

In a research note, Emkay Global said, shares of InterGlobe Aviation, which operates IndiGo is well placed in terms of near-term capacity availability.

The brokerage has maintained a 'Buy' rating with a target price of 12600, implying a 37.4 per cent upside potential from its current levels.

In YTD time, InterGlobe Aviation share price has slipped to 1,891, logging more than 7.46 per cent loss in 2023. The stock's 52-week high is 2,194 apiece and 52-week low is  1,513.3 apiece, respectively. Its market capitalisation is 72,825.99 crore.

The brokerage in its report said that India’s air passenger traffic growth continues to be resilient with Q4FY23 despite being a seasonally lean quarter. It said that the domestic passenger traffic in FY23 would be around136 million, slightly above the earlier estimate of 135million; while going by March 23 run-rate, FY24 could easily hit 165million estimate.

“Domestic pax in FY23 would be 136mn, slightly above our earlier estimate of 135mn; while going by Mar-23 run-rate, FY24 could easily hit our 165mn estimate with a high chance of bettering it. Against our 15% medium-term pax CAGR, net fleet addition (despite Air India’s mega order) should be 10-11%, thereby keeping theoretical supply lower than demand, which would support PLFs and yields," Emkay report said.

“The recent commentary by airlines, industry bodies, and MoCA officials implies a strong outlook for the Indian aviation sector, as is evident from new order announcements, regulatory approvals w.r.t. wet-leasing, and airport infra development. Indigo, with its dominant position, low-cost leadership, and running order book of 487 aircraft, is best-positioned to capture the sectoral drivers," it added.

IndiGo posted a net profit of 1,418 crore in Q3 after being in the red for the previous three quarters.

"The summer schedule with 20% lower flights YoY for other airlines as a whole vs. 3% growth for Indigo implies the latter is well placed in terms of near-term capacity availability, despite 34 AOGs (102 for the industry). We reiterate Buy with a TP of Rs2,600," Emkay said.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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Updated: 22 Mar 2023, 06:34 PM IST
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