Indigo has sustained strong yields, say brokerages; airline expected to outperform in coming quarter

Indigo share price: Brokerages are bullish on InterGlobe Aviation (NSE: Indigo) as they believe that the company has sustained strong yields. 

Credit Suisse believes that the aviation company has sustained strong yields and thus, has maintained an Outperform rating and has given a price target of Rs 2350

According to Credit Suisse, the aviation company will add more planes in the Q3, particularly 321 NEOs. 

The report further states that air traffic has recovered in both domestic and international as the fares have normalised.

ICICI Securities in a report has said that it expects the company to report strong profits in Q3FY23. 

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“We expect IndiGo to report strong profits in Q3FY23. Cost overrun on wet leases/lease extensions akin to H2FY20 is a risk but one can expect compensation from OEMs,” said Ansuman Deb, Research Analyst, ICICI Securities. 

ICICI Securities report said that Domestic daily fliers have crossed 400k as per trends in December and are now largely in line with levels of 416k seen during Dec 2019/Jan 2020 (pre-covid). 

It further said that Average Aviation Turbine Fuel (ATF) price is now lower by 8 per cent Quarter on Quarter (QoQ) in Q3FY23. Domestic load factors are also strong and likely to be higher by 350 basis points QoQ in Q3FY23 to 83 per cent (estimates).

ICICI Securities expects IndiGo’s Q3FY23E Profit After Tax could potentially be more than Rs 1500 crore. 

Shares of InterGlobe Aviation opened at Rs 2,014.95 apiece and quoted Rs 2,012.40 apiece on NSE as of 1:27pm. On BSE the stock quoted 2009.75 per share. 

Indigo Q2 results 

The total income of the company rose to Rs 12,852.29 crore in the second quarter of the current fiscal from Rs 5,798.73 crore in the same period a year ago. 

The airline's total expenses jumped to Rs 14,435.57 crore this quarter.

IndiGo recorded a net loss of Rs 1,583.34 crore in the September quarter owing to higher fuel costs and foreign exchange loss.

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