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Business News/ Markets / Stock Markets/  IndiGo is now world's third-largest airline by m-cap, stock hits 4% upper circuit at 52-week high-mark
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IndiGo is now world's third-largest airline by m-cap, stock hits 4% upper circuit at 52-week high-mark

IndiGo Share Price: Apart from today's gain, IndiGo shares have rallied nearly 22 per cent in the last one month, which has now taken the airline's m-cap to ₹1,46,936.30 crore.

Indigo has become the world's third-largest airline in terms of mcapPremium
Indigo has become the world's third-largest airline in terms of mcap

IndiGo has now become the world's third-largest airline in terms of market capitalistaion (m-cap) with shares of the operator InterGlobe Aviation Limited soaring nearly five per cent to achieve a lifetime record-high mark during intra-day on Wednesday, April 10. According to Bloomberg data, IndiGo surpassed United Airlines to become the sixth largest airline in the world during December 2023. Delta Air and Ryanair Holdings are the top two airlines with $30.4 billion and $26.5 billion m-cap, respectively, according to Bloomberg.

Shares of the low-cost budget carrier opened at 3689.95 earlier today and were locked at over four per cent upper circuit to hit a fresh 52-week high mark at 3,815.10, before settling 4.82 per cent higher at 3,806.85 apiece on the BSE. Apart from today's gain, IndiGo shares have rallied nearly 22 per cent in the last one month, which has now taken the airline's m-cap to 1,46,936.30 crore or nearly $17.7 billion (as of April 10), according to BSE data.

Network expansion, double-digit growth: Why brokerages remain bullish on IndiGo

Domestic brokerage house Prabhudas Lilladher in its report last month, gave an ‘accumulate’ call on IndiGo stock and fixed a target price of 3,961. Despite escalation in engine issues at P&W, the brokerage said that IndiGo's growth guidance of early double digits is an indication that the budget carrier is well placed to mitigate supply chain challenges. 

‘’In addition, commentary on yields was positive (expectation of growth in 4QFY24E versus a flattish guidance given earlier) with increasing focus on international markets. We increase our EBITDAR assumptions by around four per cent over the next two years,'' said the brokerage. 

Also Read: IndiGo share price hits 52-week high as UBS remains bullish, raises target price on stock

IndiGo plans to add 10 new destinations to its the network in FY25E. Expansion in fleet and network coverage is likely to result in early double digit capacity addition as well as passenger growth in FY25E. The airline expects gross addition of >1 aircraft per week in FY25E. 

Additionally, foreign brokerage firm UBS raised the target price on the stock last month. UBS maintained its positive stance on IndiGo considering the strong growth prospects of the Indian aviation industry, share gains in international travel, efficient cost structure and operational excellence.

It maintained a Buy rating on IndiGo shares and raised the 12-month target price to 4,000 per share from 3,900 earlier, implying an upside of more than 21 per cent from Friday’s closing price. The brokerage firm continues to value Indigo at 11x FY26E EV/EBITDA.

InterGlobe Aviation is India’s largest commuter airline, with a domestic capacity share of 55 per cent in FY23. Indigo maintains the world's youngest aircraft fleet, with an average age of 3.9 years.

Also Read: IndiGo co-founder Rakesh Gangwal to sell 3.3% stake in InterGlobe Aviation

“Despite factoring in higher crude prices and pilot salaries, our estimates are flat to higher, driven by better Available Seat Kilometres (ASK) growth and yields. Also, we continue to see upside risks to our yields in the near term and capacity/ demand growth and profitability over the medium term," UBS said in a report.

UBS believes the near-term trends remain positive and should lead to consensus estimate upgrades as the company indicated strong demand. It estimates ASK growth of low double digits in FY25E despite supply-chain issues, better than the brokerage estimates of six per cent growth.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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ABOUT THE AUTHOR
Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at nikita.prasad@htdigital.in.
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Published: 10 Apr 2024, 04:50 PM IST
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