InterGlobe Aviation (Indigo) Research Report By Axis Direct

Records highest ever profit

InterGlobe Aviation (Indigo) reported its highest ever PAT of Rs 8.1 bn, driven by strong traffic growth (RPK growth of 25% YoY), improved load factor (88% vs. 83% in Q1FY17) and firming up of yields (up 2% YoY).

Management lowered its guidance for ASK growth in FY18 to 20% (22% earlier) on account of unavailability of sufficient replacement engines from P&W and delay in the delivery of A320 neos. However, the management is confident that P&W will be able to resolve the engine issues over the next 1 year.

Indigo is well placed to capture market share (currently at ~40%) led by its capacity expansion. Moreover, yields have stabilized, which should ease pressure on margin (which we saw in FY17) for the industry and more so for Indigo due to its lowest cost and fuel efficient aircrafts.