IndiGo share price goes into tailspin, plunges 17% after steep fall in Q4 profit

IndiGo share price tanked over 17 per cent on Thursday after the low-cost airline reported 73 per cent drop in profit after tax (PAT) to Rs 117.64 crore for the March quarter as higher fuel costs and foreign exchange loss took a toll on its bottom line. It had reported a PAT of Rs 440.31 crore in the year-ago period. The stock tanked as much as 17.57 per cent to Rs 1111.30 on the BSE.

In its report, brokerage Motilal Oswal Securities has maintained 'neutral' rating on the stock with a target price of Rs 1,318. "The stock is trading at 14.4 times FY20E EPS of Rs 94.1 and 8.4 times FY20E adj. EV/EBITDAR. Peak valuations leave little room for upside, in our view. We value INDIGO at 14 times FY20 EPS to arrive at a TP of Rs 1,318," said the brokerage in a results review report. 

IDFC Securities also downgraded the rating to Neutral given limited upside potential in the near term. "The Q4FY18 yields have been weak as airlines have not passed on the impact of higher fuel prices. In the past too, there have been instances when airlines have passed on the impact of higher fuel prices with a lag. As such we expect yields to improve in Q1FY19 in response to higher fuel prices and favourable seasonality. However fuel prices have continued to rise even in Q1FY19 giving rise to incremental pressure on margins and earnings. After accounting for the recent surge in fuel prices, we have lowered our FY19E/FY20E earnings by 19.5 per cent to 11.1 per cent and reduced our price target by 12 per cent to Rs 1293 (based on 8.5x FY20E EBITDAR)," said IDFC Securities. 

IndiGo, the leading no-frills carrier, last week announced the sudden departure of its President and Whole Time Director Aditya Ghosh. 

The Indigo's total income in the fourth quarter of 2017-18 climbed 17 per cent to Rs 6,056.84 crore. It was Rs 5,141.99 crore in the year-ago period, according to a regulatory filing.

The budget airline - which had to cancel hundreds of flights in March due to engine issues with some of its A320 neo planes powered by Pratt & Whitney engines - recorded a significant rise in its total expenses in the latest fourth quarter.