InterGlobe Aviation Q3 Results Review - Outperforms Expectations In A Seasonally Strong Quarter: Motilal Oswal

Motilal Oswal Report

Interglobe Aviation Ltd. reported a profir after tax of Rs 30 billion (versus our estimate of Rs 24.6 billion) in Q3 FY24, aided by lower-than-expected operating and fuel costs. Revenue passenger kilometers came in at 31.3 billion. Passenger load factor was at 85.8%, with available seat kilometers of 36.5 billion (estimated 35.5 billion) and yield at Rs 5.5 (estimated Rs 5.3). 

According to our airfare tracker, the 30-day domestic forward prices for IndiGo are down 24% QoQ and the 15-day prices are down 23% QoQ in Q4 FY24 till date. The management highlighted that the yield declined in January- 24 due to seasonality; however, it remains steady on a YoY basis. The management has refrained from providing yield guidance for FY25 but expects PLF to remain elevated amid ongoing supply chain issues.

While we remain positive on the aviation sector, IndiGo would have to navigate through various challenges in the near to medium term. We reiterate our 'Neutral' rating on the stock with a target price of Rs 3,300, valuing it at 7.5 times December- 25E enterprise value/Ebidtar.

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