UBS is positive of IndiGo’s strong growth
BBN Bureau
Mumbai: IndiGo share price surged over 6% to reach a 52-week high on Tuesday following an upward revision in the target price by foreign brokerage firm UBS. IndiGo shares soared by 6.04% to touch a new high of ₹3,484.00 apiece on the BSE.
UBS reaffirmed its optimistic outlook on IndiGo, citing the robust growth prospects of the Indian aviation sector, increased market share in international travel, efficient cost structure, and operational excellence. The brokerage maintained its Buy rating on IndiGo shares and raised the 12-month target price to ₹4,000 per share from ₹3,900, indicating a potential upside of more than 21% from Friday’s closing price. UBS continues to value IndiGo at 11x FY26E EV/EBITDA.
“In spite of factoring in higher crude prices and pilot salaries, our estimates remain steady to optimistic, driven by improved Available Seat Kilometres (ASK) growth and yields. Moreover, we anticipate potential upside to our yields in the short term, and capacity/demand growth and profitability in the medium term,” stated UBS in a report.
InterGlobe Aviation, the parent company of IndiGo Airlines, commands a dominant position in the Indian commuter airline industry, with a domestic capacity share of 55% in FY23.
The company remains bullish on the long-term growth prospects of the Indian air travel industry and forecasts a robust 15% CAGR in Indian air travel, both domestic and international, from FY24 to FY30. The company is actively pursuing international expansion, and both the company and Indian regulators envision India becoming a key global hub for international travel connections.
During an analyst meeting on March 22, IndiGo outlined its FY25 guidance, projecting low double-digit ASK/demand growth YoY with the addition of at least one new aircraft per week. It also anticipates adding 10 new destinations while increasing its employee count by 5,500-6,000.
In FY24, IndiGo expanded its network by adding 10 new domestic and 7 international destinations. Its share of international travel increased to 27 per cent of ASK (Available Seat Kilometres) in FY24E from 23% in FY23.
