Geojit has given Buy recommendation for InterGlobe Aviation with a target price of Rs. 2281 in its research report issued on Sep 01, 2022
Geojit’s research report on InterGlobe Aviation
InterGlobal Aviation Ltd (Indigo) is one of the most efficient low cost carriers (LCC) with a market share of 54% in Indian aviation sector. Q1FY23 earnings was impacted by higher fuel prices and adverse currency movement. Revenue growth was higher than expected led by strong leisure and pick-up in corporate travel. Aircraft utilization was ~80%. In the backdrop of normalization of passenger traffic, Indigo’s capacity both international and domestic has reached to precovid levels. Expect tourism & corporate travel growth momentum to continue. While given Indigo’s capacity expansion, penetration into Tier 2-3 cities and focus on route optimization will help them to gain further market share. ATF prices have started to moderate, while higher capacity utilization, cost rationalization, stable ticket price and faster replacement of older aircraft will bring down cost.
Given healthy cash position and likely improvement in earning, we value Indigo at P/E of 17x (6.1x EV/EBITDA) and maintain to Buy with a target price of Rs. 2,281.