Shares of InterGlobe Aviation surged over 10% to ₹1,816.20 after the company said it is planning to raise fares to return to profit after posting a loss in the March quarter.
The company, which runs India’s biggest airline IndiGo, posted a consolidated net loss of ₹1,681 crore for the quarter, which had widened compared to the net loss of ₹1,159 crore a year ago.
Analysts said the March quarter reflected the impact of the Omicron variant of Covid-19 in January and February but pent-up demand will continue to support the near term growth of the airline.
With its lean cost structure, IndiGo is better positioned in the airline industry in the current inflation scenario, say analysts.
JP Morgan has upgraded the stock to overweight from neutral and raised the target price to ₹2,000 from ₹1,825 owing to better than expected demand and yield.
“IndiGo’s strong volume growth potential combined with a potentially reducing cost curve is attractive over the long term. IndiGo has sustained its fixed-cost competitiveness and balance sheet strength versus its peer group over a long cycle and the advantage is likely to remain structural,” said JP Morgan. The year-to-date underperformance to Nifty is likely to close with strong demand, said JP Morgan.
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