IndiGo share price soars 5% as Elara Securities upgrades stock to ‘Buy’ from ‘Sell’. Check target price and rationale

IndiGo share price experienced a sharp rise of 5 per cent in intra-day trade on Tuesday, December 24, driven by a bullish call from domestic brokerage Elara Securities.

The brokerage house, in a report dated December 21, upgraded IndiGo’s rating to ‘Buy’ from ‘Sell’ and raised the target price to ₹5,309, indicating a 20 per cent upside from the last close of ₹4,440.50. Elara sees IndiGo as a key beneficiary of the growth in India's aviation sector.

At 1.42 pm, IndiGo share price was trading in the green, up 3.60 per cent on the BSE.

Rationale behind IndiGo stock price upgrade

The aviation industry is expected to grow at a compound annual growth rate (CAGR) of 12 per cent between FY25 and FY28, supported by capacity expansions and new infrastructure projects. Key developments include the opening of new airports in Delhi and Mumbai by April 2025, terminal expansions at Bengaluru, Chennai, and Ahmedabad, and the return of IndiGo’s Pratt & Whitney engine-fitted fleet, which had previously been grounded due to technical issues, the report added.

The report emphasised that IndiGo is well-positioned to capitalise on these tailwinds. “India’s aviation market is set for robust expansion with new airports, increased terminal capacities, and returning fleets. This positions IndiGo as a beneficiary of these favourable tailwinds,” the report stated.

The stock's rally comes on the back of IndiGo’s dominant market share of over 60 per cent in domestic air traffic. The company’s large fleet size of 364 aircraft is expected to grow with new orders for 910 Airbus aircraft, enabling IndiGo to cater to increasing demand. In Q2 FY25, passenger demand utilisation peaked at 90 per cent across major airports, showcasing the strong recovery and robust growth trajectory of the aviation sector, as per the report.

IndiGo also reported a 53.7 per cent share price growth over the last 12 months. The stock’s surge reflects investor optimism not only in IndiGo’s ability to capitalise on these growth drivers but also in the broader aviation sector, as international traffic is expected to grow at a 14 per cent CAGR, outperforming domestic trends, the report added.

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