INTERGLOBE

AVIATION LTD.
Equity
Research Report

SANJEEDEEP MISHRA
 InterGlobe Market Cap in Cr. 95,498.1

Aviation Ltd. Operating Rev. Qtr. Cr. 14,160.6

Industry : Airlines
P/B -15.3
NSE: INDIGO | BSE: 539448

India's largest airline, Indigo, ordered

Net profit QTR Cr. 919.2
A320 Neo family aircraft, which is the
most popular narrow bodied, single
aisle, no frill aircraft This eclipses the TTM PE ratio -312.3
470 aircraft ordered by Air India, which
was made back in February 2023, MFI 65.8
making this the biggest order in the
history of commercial aviation.
Indigo, as of May 2023, has the market Out of the 500 freshly ordered
share of 61.5% followed by Tata Airbus 300 are A321 Neo and
Airlines, comprising of Air India and Air XLR aircrafts which are longer
Asia. Indigo currently has 300 aircrafts ranged aircrafts and operates up
in its fleet. It covers 1800 daily flights to 8 hour. This shows the
and 78 domestic destination. Its company's intention to
international destinations increased increase its international
from 26 to 32 cities and now covers exposure. This will also be
most of the Asian and African cities. crucial for Indigo for ambitious
So, by placing a much bigger order, the expansion plan in Europe. It
airline wants to ensure an also plans to increase its
uninterrupted supply of new aircrafts international seat share by 23%
in the next decade to expand its fleet. in FY23 to 30% within two years
Indigo already has a pending delivery of and also increasing its
477 aircrafts of the same A320 family international flights by adding
by 2030 from which 7 were delivered in 174 international flights.
April,23 and 12 of them were delivered
in May, 2023.
 Owing to Indigo's successful
single aisle aircraft strategy that
drives its low cost business model,
even in the ongoing global engine
crisis Indigo is going to deliver an
estimated PAT of 17 billion
rupees Q1FY23E.
The airline wants to ensure its
delivery slots so that the fleet size
remains steady. Because Indigo
plans to retire around 100 aircraft
by 2030 and needs fresh planes to
maintain the targeted fleet size of
over 700 in the coming decade. A
global supply chain disruption has
delayed the production of new
aircrafts and the delivery will have
to wait between 2032 to 2035.
Indigo is now facing a resurgent Air
India under the Tata Group but it is
convinced that its superior cost
efficient model will keep it ahead
of its competitors as the Indian
aviation sector undergoes
consolidation. The airline also
expects an advantage in terms of
its lease rates as it has
established its credit
worthiness during COVID when it
didn't default on any of its lease
repayments.
Following, a sharp recovery post-
covid, now the average daily
domestic traffic is at 427K
levels in Q1FY24. There is a
gradual decline in the top ten
airport shares in overall traffic
indicating an increasing in air
travel penetration in India. The
average price for ATF and
fuel/ASK to decrease by 11 to
15%.
The new deliveries will further
lower Indigo operating costs and
increase its fuel efficiency.
Indigo's fleet management has
been its absolute bedrock in
building its cost efficient airline
operation. The strategy is of
ordering fleet in advance to
ensure continuous increase in
capacity and maintaining a low
cost structure.
 Over the last three months, the IndiGo's CEO Pieter Elbers while
airline's share price has rallied speaking on the surge in
over 30% to 2472 a share. airfares across India said that
these fluctuations are likely to
So far, IndiGo has not officially continue, according to an
revealed its plan yet on acquiring Economic Times (ET) report.
wide-body planes, but may soon Elbers attributed these
announce the details of the fluctuations to disruption in
transaction. capacity caused by Go First's
Aviation Minister Jyotiraditya flights being suspended.
Scindia unveiled the Centre’s plan However, he called it a
of making India an international temporary disruption in the
aviation hub. “Far too long, our capacity as well as in pricing and
hubs have been located outside said the prices are stabilising
our eastern borders and outside now.
our western borders," he stated.
Shareholding
“We are working to create Delhi as
our first hub, and I think that with Promoters have decreased
the expansion of infrastructure, the holdings from 71.92% to 67.86%
expansion of our fleets, and the in Mar 2023 qtr.
expansion of creating an
international footprint in India, the FII/FPI have increased holdings
Prime Minister’s dream of from 17.77% to 19.43% in Mar
democratising civil aviation has 2023 qtr.
now become a reality," he said.
Mutual Funds have increased
holdings from 6.23% to 8.32% in
Mar 2023 qtr.
 Analysis
Annual revenue rose 109.6%, in
the last year to Rs 55,881.4 Crores.
Its sector's average revenue growth
for the last fiscal year was 32.7%.
Annual net profit rose 95% in the
last year to Rs 305.8 Crores. Its
sector's average net profit growth for
the last fiscal year was 557.4%.
Stock price rose 50.4% and
underperformed its sector by 0.2% in
the past year.
Debt to equity ratio of -0.4 is less
than 1 and healthy. This implies that
its assets are financed mainly
through equity.
MF holding increased from 6.23%
to 8.32% in Mar 2023 qtr.
Interest coverage ratio is 2.5,
higher than 1.5. This means that it is
able to meet its interest payments
comfortably with its earnings (EBIT).
Quarterly revenue rose 76.5%
YoY to Rs 14,600.1 Crores. Its
sector's average revenue growth
YoY for the quarter was 17.8%.
Quarterly net profit rose 154.7%
YoY to Rs 919.2 Crores. Its sector's
average net profit growth YoY for
the quarter was 586.2%.
Price to earning ratio is -312.3,
lower than its sector PE ratio of
29.5.
Promoter shareholding decreased
by 4.1% in the most recent quarter
to 67.9%.
Promoter pledges are zero.
 SWOT Analysis
Strength
Consistent highest return stocks
over five years.
Stocks with improving cash flow,
with good durability.
Good quarterly growth in the
recent results.
Efficient in managing assets to
generate profits- ROA improving
since last two years.
Company with zero promoter
pledge
growth in Quarterly net profit with
increasing profit margin year on
year
FII/FPI our institutions increasing
their shareholding
Growth in operating profit with
increase in operating margins
YOY
Nearly 52 weeks high.
Strong momentum- price above
short, medium and long term
moving averages
Weakness
Decline in net profit with falling
profit margin QOQ
Book value per share
deteriorating for last two years
Opportunity
Brokers upgraded
recommendation or target price in
the past three years.
Stocks that benefit from lower
crude oil prices.
Company that saw improvement
in net profits, operating margin
and revenues in the most recent
quarters.
High momentum scores.
Stocks with low PE.
RSI indicating price strength.
Threat
Firms linked with ongoing
regulatory investigations/legal
cases.
Companies seeing significant
coronavirus impact.
 About the Company

Connecting 88 airports in 10 countries, InterGlobe Aviation

Limited is one of India's leading airline. The principal activities
of the Company comprises of air transportation which
includes passenger and cargo services and providing related
allied services including in-flight sales. The Company
operates its flights under the IndiGo brand. IndiGo primarily
operates in India's domestic air travel market as a low-cost
carrier. InterGlobe Aviation was originally incorporated in
Lucknow as InterGlobe Aviation Private Limited, as Private
Limited Company on January 13, 2004 with the Registrar of
Companies, Uttar Pradesh and Uttaranchal at Kanpur.
Pursuant to a Special Resolution of the Shareholders of the
Company on June 30, 2006, Company converted into a Public
Company and name of the Company was changed to
'InterGlobe Aviation Limited' subsequent to which, a fresh
Certificate of Incorporation was issued by the Registrar of
Companies, National Capital Territory of Delhi and Haryana on
August 11, 2006. In June 2005, InterGlobe Aviation placed a
landmark order of 100 A320 aircraft with Airbus. In July 2006,
InterGlobe Aviation took delivery of its first aircraft. In August
2006, the company launched domestic operations. In April
2007, IndiGo crossed the one million passenger mark. In April
2009, the carrier crossed 10 million passenger mark.