IndiGo shares rally 10% post Q3 results. Brokerages upgrade stock, raise target price
Premium- Edelweiss has upgraded IndiGo shares to Buy due to its improved prospects and has raised target price
Shares of InterGlobe Aviation, the parent of IndiGo, jumped over 10% to ₹2,152 apiece on the BSE in Monday's deals after the airline reported net profit of ₹129.8 crore in Q3, fuelled by higher passenger revenue, as compared to loss of ₹620 in the year-ago period.
Reflecting signs of slow recovery in the pandemic-hit airline industry, IndiGo's revenue from operations jumped to ₹9,294.8 crore in the latest December quarter compared to ₹4,910 crore in the same period a year ago.
Analysts at Edelweiss have upgraded IndiGo shares to ‘Buy’ from 'Hold' due to its improved prospects and have raised target price to ₹2,380 (from ₹1,896). "Near term, Indigo is a proxy for a re-opening trade led by better yields and pent-up PAX demand. Longer term, addition of XLRR fleet and improved cargo business shall enhance competitiveness," they said in a note.
In a significant development, the company has appointed its co-founder Rahul Bhatia as Managing Director with immediate effect and he would oversee all aspects of the airline.
“Whilst near-term Covid-led uncertainties would remain, we remain positive given Indigo’s strong balance sheet, efficient fleet and cost structure which should help it leverage on the structural shifts in aviation," said brokerage house Ambit Capital. The brokerage has Buy rating on IndiGo stock with a revised target price of ₹2,350 ( ₹2,300 earlier).
Further, Indigo’s focus on long-term relationships with stakeholders, including lessors and employees, would also be positive once the Covid-19 impact subsides. Moreover, in longer term, Ambit continues to believe Indigo’s strategy to focus away from metro routes and expand into Tier-2/Tier3 domestic routes and international routes would ultimately bear fruit (both are higher yielding compared to metro routes).
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The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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