IndiGo’s share price increased by 1.82% to Rs. 5,739.50 on November 6, 2023, driven by market optimism despite the airline reporting a significant quarterly loss. The parent company, InterGlobe Aviation, experienced a surge of over 3% in early trading, buoyed by the announcement of enhanced capacity growth guidance for the financial year 2026.
Analysts from leading brokerages, including Motilal Oswal and PL Capital, maintained strong buy ratings on IndiGo, setting target prices between Rs. 6,300 and Rs. 7,300. The positive sentiment stems from expectations of a robust recovery in demand, supported by capacity expansions, efficient operations, and the increasing popularity of air travel in India.
The airline’s share price opened at Rs. 5,750 and reached an intraday high of Rs. 5,833.50, with a trading volume of 1.78 million shares—significantly higher than the 20-day average of 600,000. This activity reflects heightened investor interest, pushing the company’s market capitalization to approximately Rs. 2.22 lakh crore.
Despite the stock’s rise, IndiGo reported a net loss of Rs. 2,582 crore for the July to September quarter of FY26, compared to a loss of Rs. 987 crore in the same period the previous year. This widening loss was primarily attributed to foreign exchange fluctuations and surging operating costs. However, when excluding forex-related losses, the airline posted a net profit of Rs. 104 crore, indicating underlying business strength.
Revenue from operations grew by 9.3% year-on-year to Rs. 18,555 crore, benefiting from strong passenger demand and higher yields. Total expenses, however, surged by 18.3% to Rs. 22,081 crore, with foreign exchange losses increasing drastically to Rs. 2,892 crore.
Despite near-term profitability challenges, analysts remain optimistic about IndiGo’s long-term prospects. Motilal Oswal Financial Services reiterated its buy rating with a target price of Rs. 7,300, highlighting that while short-term earnings may be affected by volatility in foreign exchange and rising costs, IndiGo’s strategic capacity additions—especially on international routes—are expected to bolster future growth and mitigate currency exposure risks. Similarly, PL Capital set a target price of Rs. 6,332, projecting a 12% compound annual growth rate (CAGR) in sales and an 11% CAGR in EBITDAR from FY25 to FY27.
Analysts view IndiGo as one of the leading players in India’s aviation sector, with its substantial market share, efficient cost structure, and expanding international presence. The company has revised its capacity growth guidance for FY26 from low double digits to mid-teens, underscoring its confidence in rising passenger demand and long-term growth potential.
While earnings may continue to face pressure in the near term due to forex losses and increased costs, the long-term outlook remains promising, driven by the burgeoning Indian air travel market and IndiGo’s strategic fleet expansion. Investors with a medium- to long-term perspective are advised to consider holding or accumulating the stock on dips, with potential for upside once cost pressures ease and capacity expansion begins to yield returns.
In summary, IndiGo’s share price rise signals a belief in the airline’s future despite the current financial challenges, positioning it as a viable option for investors looking to navigate the evolving landscape of India’s aviation industry.