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New Delhi: Brokerage firm Investec has recommended selling the shares of InterGlobe Aviation (IndiGo). The brokerage has released a report on the airline company stating that there are apprehensions of a decline in the company's profits in the first quarter of 2025-26.
Investec has predicted that IndiGo's PAT (net profit) may decline by 13 per cent year-on-year and 22 per cent quarter-on-quarter in the first quarter of FY 2025. The brokerage cited reduction in compensation from Pratt & Whitney (P&W) and softening of passenger flight ticket prices as the reason behind the possible fall in the profits. The report further added that though aviation fuel prices have declined which is positive for the company, but profits will remain under pressure due to other operational expenses.
Investec predicted that InterGlobe Aviation’s unit income i.e. RASK (Revenue per Available Seat Kilometer) could decline to Rs 5.02, while the cost i.e. CASK (Cost per ASK) can remain up to Rs 4.42 in the April-June quarter of FY25. The report further mentioned that RASK-CASK spread can go down by 22 per cent to just Rs 0.60. Passenger fares are expected to fall by 3 per cent and other income by 76%, it added.
While initiating a Sell rating for InterGlobe Aviation (IndiGo) shares, Investec said that the stock has jumped around 35 per cent in the past one year, however, the appreciation in shares is not based on real fundamentals but on macro sentiment and speculation about inclusion in the index. The brokerage predicted the IndiGo shares to drop to Rs 4,050.
The report mentioned that the airline could continue to face pressure in the current fiscal due to compensation of P&W and the extra benefit from big events like Maha Kumbh 2025 will no longer be available.
In its financial results of 2024-25, IndiGo posted a net profit of Rs 72,584 million in the previous fiscal (FY25). In the last quarter of 2024-25, teh airline posted a net profit of Rs 30,675 million, the highest fourth quarter ever.
For the year ended March 31, 2025, IndiGo mentioned that its revenue from operations spiked by 17.3 per cent to Rs 808,029 million. There was a reduction in fuel CASK by 3.1% to Rs 1.66, while CASK ex fuel increased by 12.5% to Rs 3.
The company mentioned EBITDAR of Rs 212,520 million (26.3% EBITDAR margin), compared to EBITDAR of Rs 175,447 million (25.5% EBITDAR margin).
(Disclaimer: (Disclaimer: This article is only meant to provide information. TV9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds and crypto assets.))
