IndiGo shares in focus as Goldman Sachs reiterates its buy call: Check rationale and target price

IndiGo shares are in focus in Tuesday’s session (July 2) as global brokerage Goldman Sachs has continued with its ‘buy’ rating on the counter with a raised target of Rs 4,700 as against the earlier suggested target price of Rs 3,600. The new target suggests a potential upside of over 11 per cent.

The brokerage believes that if there is a lag in fresh deliveries of aircraft then it will put pressure on costs, resulting in near-term cost pressures. Nonetheless, the long-term story of the company remains intact.

Furthermore, as the brokerage expects international travel to grow at a CAGR of 13 per cent till 2030, it anticipates market share gains to continue for the no-frill airline operator. 

In the previous day’s trade, shares of the air carrier ended lower by 0.19 per cent or Rs 7.9 at Rs 4,220.05 per share on the BSE.

On Monday (July 1), another global brokerage UBS also continued with its buy rating on IndiGo with a raised 12-month price target of Rs 5,400. The brokerage is bullish on the company’s medium-term profitability  driven  by  a  highly  favourable  industry  structure. Also, it foresees market share gains for the company to continue in international travel, aided A321  XLRs/ A350s  in  the  medium/long  term.  

Though the brokerage anticipates a short-term impact on the profitability of IndiGo on account of sudden significant rise in supply, seasonality or sharp fuel price increases, it expects the company to log a 13 per cent EBITDA CAGR over FY24-27E with upside risks. 

Thus, any associated dip is deemed as an ideal buying opportunity by the brokerage.

IndiGo’s share price performance

In the last one year, shares of Interglobe Aviation have gained 61 per cent, while its year-to-date (YTD) return is over 42 per cent.