Broker’s call: Interglobe Aviation (Long)

Despite elevated fuel prices and the withdrawal of the ATF price cap, fuel cost per ASK declined 2 per cent q-o-q, contrary to the expected increase in unit fuel costs

Target: ₹5,560

CMP: ₹4,870

IndiGo delivered a better-than-expected 2QFY27 performance, with revenue growing 26 per cent y-o-y to ₹23,360 crore, supported by a 34 per cent y-o-y increase in yield to ₹6.30. Despite passengers declining 5 per cent and ASK falling 1 per cent, EBITDA stood at ₹1,910 crore versus our estimate of ₹630 crore. The net loss of ₹1,880 crore was also narrower than our estimate of ₹3,070 crore, reflecting stronger realisations and better-than-expected operating performance.

Despite elevated fuel prices and the withdrawal of the ATF price cap, fuel cost per ASK declined 2 per cent q-o-q, contrary to the expected increase in unit fuel costs. This provided some relief against the broader cost pressure. However, capacity rationalisation amid high fuel prices, rupee depreciation and geopolitical uncertainty has weighed on passenger growth and constrained fixed-cost absorption, limiting the extent of margin improvement.

Management expects PRASK growth of over 25 per cent in Q3-FY27, with capacity growth in the early single digits and load factors broadly flat y-o-y.

We expect earnings to improve as fuel-cost pressures ease and capacity deployment normalises. IndiGo’s scale, pricing flexibility and market position support our constructive view, although the pace of recovery remains sensitive to fuel prices, currency movements and demand. We maintain Long with a Mar’28 target price of ₹5,560, based on 8x one-year-forward EV/EBITDAR.

Published on October 30, 2026