IndiGo shares tumble 13% after slipping to Rs 987 crore loss in Q2. Should you invest?

Synopsis

IndiGo Share Price: InterGlobe Aviation's IndiGo shares dropped 13% after reporting a ₹987 crore loss in Q2 FY2024, compared to a ₹189 crore profit YoY. Revenue rose 14% to ₹16,970 crore. Major reasons include aircraft groundings and high fuel costs. Analysts have adjusted target prices and ratings accordingly.

Shares of InterGlobe Aviation-operated IndiGo plunged 13% to hit the day's low of Rs 3,778 in Monday’s trade on BSE after the company reported a loss of Rs 987 crore for the second quarter ended September 2024. This is a significant decline from a profit of Rs 189 crore in the September quarter of the previous year and Rs 2,728 crore in the preceding June quarter.

Revenue from operations, meanwhile, jumped 14% year-on-year (YoY) to Rs 16,970 crore in the reporting quarter. While the market was expecting InterGlobe Aviation to report losses, the actual figure was much higher than anticipated. For instance, an ET Now poll projected the airline's losses to be around Rs 219 crore.

In a traditionally weaker second quarter, the budget carrier reported that earnings were further impacted by challenges related to aircraft groundings and rising fuel costs.

Here is how analysts viewed the Q2 results:

Kotak: Buy | Target price: Rs 5,200

Nuvama: Hold | Target price: Rs 4,415

The near-term outlook appears challenging as capacity growth is outpacing demand growth, which is affecting PRASK. Current valuations are unsupportive; however, positive factors create a balanced risk-reward scenario. Nuvama has reduced its FY25E and FY26E EBITDAR estimates for the stock by 14% and 7%, respectively, following a moderation in their yield forecasts.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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