IndiGo shares in focus after profit jumps 62% YoY to Rs 3,067 crore on wedding, Maha Kumbh boost
Shares of
IndiGo
will be in focus on Thursday after the airline posted a 62% year-on-year jump in net profit to Rs 3,067 crore for the March quarter, driven by strong travel demand during the Maha Kumbh Mela and wedding season. This marks the airline's second-highest quarterly profit.
The company reported revenue from operations of Rs 22,152 crore, which was up by 24% from Rs 17,825 crore in the corresponding quarter of the last financial year.
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For the full fiscal year ended March 31, IndiGo reported a net profit of Rs 7,258 crore, down 11% from the previous year. The board has declared a dividend of Rs 10 per share.
"It was an exceptionally strong fourth quarter with strong demand, a good execution of our strategy and some events like the Maha Kumbh obviously helping the performance," said Pieter Elbers, CEO of IndiGo. "Our sustained performance is the result of record passenger volumes, operational efficiencies, agility and commitment demonstrated by IndiGo employees."
IndiGo's yields-a metric of profitability-increased 2.4% on-year to Rs 5.32 per kilometre last quarter. Passenger load factor improved by 1.1 percentage points to 87.4%.
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However, the airline has been impacted by geopolitical tensions between India and Pakistan. It faced large scale ticket cancellations when India shut 32 airports earlier this month due to the conflict with Pakistan.
Chief financial officer Gaurav Negi said the trend of cancellations has started to reverse and he expects the upcoming summer holidays to further drive passenger traffic.
"All these airports have opened up and we think that the peak of the cancellations have happened, but the trend has started to reverse after the geopolitical events," Negi said in a post-results call with analysts.
IndiGo also announced flights to Amsterdam and Manchester from July-its maiden foray into long-haul flying-using Boeing 787 aircraft leased from European carrier Norse Atlantic. Till now, IndiGo's network remains limited in domestic and up to six hours of flights to international destinations.
Executives said the onboard experience will be noticeably different from a typical no-frills IndiGo flight.
All passengers, regardless of cabin, will receive two sets of complementary hot meals-a first for the carrier. In IndiGo Stretch premium cabin, passengers will get complimentary lounge access.
Elbers highlighted that IndiGo is pushing into longer-haul markets. "Indian operators' share was in the mid-30s till a few years ago. Over the last few years, this share has gone up to 45-46%," he said, citing regional expansion as the primary driver. "That is why we are now starting flights to destinations like Manchester."
Meanwhile, the fleet of IndiGo's grounded planes due to issues with Pratt and Whitney engines has also reduced, after peaking at the mid-70s in Q2FY25, before falling to 50s in Q4. Currently, the number stands at 40s. With return of the aircraft, IndiGo will be able to phase out aircraft taken on higher lease rentals, improving cost efficiency, Negi said.
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IndiGo share price target
According to Trendlyne, IndiGo has an average target price of Rs 5,608, indicating a 3% upside from current levels. The stock holds a 'Buy' rating based on recommendations from 21 analysts.
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