IndiGo share price hits fresh record high; Motilal Oswal upgrades the stock to a buy

InterGlobe Aviation (IndiGo) share price hit a fresh record high in intraday trade on BSE on Tuesday, April 15, amid strong buying in the Indian stock market. InterGlobe share price opened at ₹5,260.05 against its previous close of ₹5,151 and rose nearly 4 per cent to a record high of ₹5,345. Around 10:35 AM, IndiGo share price traded 2.66 per cent higher at ₹5,288.

IndiGo's share price has been on the roll this year due to the aviation company's strong growth prospects . Year-to-date, the stock has gained 17 per cent. On a monthly scale, the stock has risen over 4 per cent in April after a 14 per cent rise in March and a 4 per cent gain in February.

IndiGo plans to add one aircraft per week till 2030, with the company planning to take the total aircraft capacity to over 600-plus by FY30. It also plans to expand its international capacity share to 40 per cent from 25 per cent currently. Furthermore, it looks to expand its fleet range with widebodies from FY25 and XLRs from FY26, allowing the company to take on more international long and mid-long haul routes.

Motilal Oswal upgrades IndiGo to a buy

Brokerage firm Motilal Oswal Financial Services has upgraded IndiGo stock to a buy with a target price of ₹6,550, based on 10 times FY27E EV/EBITDAR. The target price implies a 27 per cent upside potential in the stock from its previous session's (April 11) close of ₹5,151.

“We upgrade IndiGo to a buy as we believe that benign Brent crude prices amid the ongoing geopolitical turmoil and favourable domestic demand bode well for the company. We assign a target price of ₹6,550 premised on 10 times FY27E EV/EBITDAR,” Motilal Oswal said. 

"The stock trades at a P/E of 20 times FY26 EPS and 9.7 times FY26E EV/EBITDA. We estimate a CAGR of 28 per cent and 38 per cent in EBITDA and PAT, respectively, during FY25-27E," said Motilal Oswal.

Motilal Oswal underscored that IndiGo adopted a completely different operational strategy after Pieter Elbers became CEO in September 2022.

"Pieter Elbers has over 30 years of experience working in different positions at KLM Royal Dutch Airlines. His wealth of experience has helped IndiGo compete with global majors and consistently increased its market share in the domestic market. This could also pose as a ‘key man’ risk," said Motilal.

The brokerage firm further added that IndiGo serves over 100 million passengers and adds an average of one aircraft a week. Through strategic airline partnerships, it has expanded its international share to nearly 28 per cent in FY25 of available seat kilometres (ASK).

Further, Motilal highlighted that the company focuses on strengthening its global presence via loyalty programs and proactive brand-building efforts while continuously refining schedules to enhance reliability and attract a larger share of international travellers.

However, Motilal Oswal highlighted that delays in wide-body aircraft deliveries or rising aircraft-on-ground (AOG) cases are a key risk. 

Moreover, sharp volatility in crude prices or the rupee could pressure margins if not passed on to customers. 

Furthermore, a higher share of business-class seating or a premium fleet may dilute IndiGo’s cost advantage.

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