Shares of InterGlobe Aviation Limited, the parent company of IndiGo airline, saw a significant drop following a reduction in the stock’s price target by global brokerage firm Citi. The brokerage slashed the target price by approximately 10.5% to Rs 5,100 per share from the earlier Rs 5,700. Despite this adjustment, Citi maintained its “buy” rating on the stock, indicating a potential upside of around 17% from the previous closing price.
Citi highlighted various challenges that IndiGo has encountered in the past year, impacting its operations and outlook. These challenges included adverse geopolitical conditions in the first quarter and disruptions due to stricter flight duty time limitation (FDTL) norms later in the year, leading to multiple flight cancellations affecting the third-quarter performance. Additionally, ongoing geopolitical tensions and other factors have further added to the airline’s uncertainties.
IndiGo’s international operations have also been affected by the changing geopolitical landscape, coupled with the potential pressures from rising fuel prices and a weakening Indian rupee, which might impact the airline’s profitability in the upcoming months. Despite these challenges, there have been positive developments such as the airline’s recovery in domestic market share in January, reaching 63.6% from 59.6% in the previous month, and maintaining a competitive cost structure compared to its peers.
Shares of InterGlobe Aviation witnessed a decline of up to 3.6% during the session, hitting an intra-day low of Rs 4,194.1 post the brokerage update. As of 1:52 pm, the stock was trading 1.61% lower at Rs 4,280.8 per share, reflecting a month-on-month decrease of about 14.5%.
