Emkay Global Financial's research report on InterGlobe Aviation
Indigo hosted its first-ever Analyst Day in Gurugram, wherein its top management laid out the broad FY24 guidance – of 16-17% ASK growth YoY, 100mn total pax and fleet expansion to 350 aircraft. Management highlighted the potential of the rapidly-growing aviation market and India’s need for 1,100 planes by CY27 vs ~700 currently. Indigo remains well placed in the space, with its ongoing order book of ~500 aircraft, and aims to double in terms of both, size and scale, by CY30. Despite supply-side issues likely continuing in CY23, capacity should be supported by steady gross adds, lease extensions, wet-leasing and future engines being CFM. International would be a key growth area for Indigo, with aim of ASK share touching 30% in 2 years vs 23% now. Also, fuel costs have started coming off.
Outlook
While Q4 is seasonally weaker, decline in airfares from the Q3 highs have boosted demand. Yields would fall more than the seasonal trend, albeit remaining strong vs pre-pandemic. While capacity and pax guidance is in line with our assumptions, guidance of net-fleet addition of 46 in FY24 is better than our 30-35 p.a. assumption and points to Indigo’s robust position, even amid delivery & engine concerns. We reiterate BUY, with TP of Rs2,600/share.
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