IndiGo share price hits record high; Kotak remains positive, sees a 30% upside in stock
IndiGo share price: As of the March 18 close, IndiGo share price has gained about 72 per cent in the last one year. Equity benchmark Sensex has gained 25 per cent in the same period.
IndiGo share price: InterGlobe Aviation (IndiGo) share price climbed nearly 3 per cent to hit its fresh record high of ₹3,339 in morning trade on BSE on Tuesday, March 19. IndiGo share price opened at ₹3256.45 against its previous close of ₹3248.10 and rose about 2.8 per cent to hit its fresh all-time high level. Around 10:15 am, the stock traded 1.25 per cent higher at ₹3,288.65.
As of the March 18 close, IndiGo share price has gained about 72 per cent in the last one year, significantly outperforming the equity benchmark Sensex which has gained 25 per cent in the same period.
The sharp rise in the stock price over the year has spiked its PE (price-to-earnings) ratio, a key measure of valuation which shows how expensive or cheap a company’s share price is relative to its earnings. According to Trendlyne, the stock's trailing twelve-month PE is 17.7 which is above the industry median.
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However, brokerage firm Kotak Securities is positive about the stock as it maintained a buy call on the stock and raised the target price to ₹4,200, implying a 30 per cent upside potential.
The brokerage firm believes IndiGo's peers' capacity addition will be limited while IndiGo will add capacity at a pace similar to or faster than the market over this period. It underscored that both Boeing and Airbus have record backlogs at 11-12 years of annual deliveries.
"We estimate the country to grow aircraft capacities by 11 per cent over FY24-30 and seat capacities at slightly higher CAGR. At the same, we build in some part of the risk of the Boeing Exposure (more than 25 per cent of a backlog of Indian Carriers) getting deferred beyond its timeline," Kotak pointed out.
"IndiGo has shared a 2030 capacity guidance suggesting 11-12 per cent CAGR in the fleet count and a slightly higher CAGR for ASK (available seat kilometres) and is well-placed to deploy this capacity across domestic and international routes. Pricing, the one variable for IndiGo, may not see a meaningful impact from competition," said Kotak.
Additionally, Kotak pointed out that Indigo accounts for nearly 60 per cent of the country’s order backlog, has placed orders much before the rest of the market and has zero exposure to Boeing.
Moreover, the opening of new airports may lead to healthy growth in demand over a base not yet fully served by Indian carriers, Kotak said.
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