IndiGo shares fly high after airline expands its wings to six new destinations

IndiGo, the country’s largest airline, will start direct flights to six new destinations in Africa and Central Asia, including Nairobi, Tbilisi, and Tashkent, this year, marking a massive international expansion. Following the news, shares of InterGlobe Aviation Ltd. (IndiGo) climbed over a per cent on BSE, recovering all the losses of Thursday’s trade and recording the day’s high at Rs 2379.4 apiece. At the time of filing this report, the scrip traded at Rs 2378 apiece, up 1.48 per cent, which is 1.4 per cent lower than the 52-week high of Rs 2,412 apiece. The stock closed 1.61 per cent higher at Rs 2380.95 apiece.

The aviation company is set to connect Nairobi in Kenya and Jakarta in Indonesia with direct flights from Mumbai in late July or early August. "Delhi will get connected in August to Tbilisi, Georgia, and Baku, Azerbaijan, and in September to Tashkent, Uzbekistan, and Almaty, Kazakhstan," IndiGo said in a release on Friday. After the execution of the plan, the airline will be connecting a total of 32 international destinations, compared to 26 currently.

Also Read: IndiGo announces six new direct routes between India, Africa, and Central Asia 

Further, the airline will add 174 new weekly flights between June and September 2023, including new destinations, routes, and frequencies. IndiGo is also strengthening its European connectivity through codeshare connections with Turkish Airlines. Currently, it offers connectivity to 33 destinations in Europe via Istanbul.

"With this expansion in our network, we will now be directly touching 32 international destinations (up from 26), next to our 78 domestic destinations," IndiGo CEO Pieter Elbers said.

Brokerages' view

Reliance Securities expects healthy air passenger traffic over the next 2 years and believes that the airline’s strong cash position will help sustain its market share and pricing power going forward, which will drive its overall profitability. Thus, it has initiated a ‘buy’ call on the stock with a target price of Rs 2,750 apiece.

Emkay Global is also bullish on IndiGo and has given a ‘buy’ for a target of Rs 2,600 apiece.

"India’s air passenger traffic growth continues to be resilient, with Q4FY23 showing strong numbers despite being a seasonally lean quarter. Domestic passengers—the number of passengers carried by airline—in FY23 would be 136 million, slightly above our earlier estimate of 135 million," said the brokerage.

"Indigo had guided to add 10-15 new destinations in FY24E and 6 have already been added on the international side. Further, the aim is to increase international ASK share to 30% in the next 2 years (~23% in FY23). Given the expansion that is happening on the international side, we believe Indigo is well on track to achieve the guidance. Retain BUY with a TP of Rs 2,565," said Jinesh Joshi – Research Analyst, Prabhudas Lilladher Pvt Ltd.

IndiGo share price: Past performance

IndiGo shares have gained over 16 per cent year-to-date (YTD), a sharp rise against the benchmark’s rise of nearly 2 per cent. In the past one month, the stock has climbed over 14 per cent, outperforming the Nifty50’s rise of over 2 per cent.

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