Higher costs, capacity curbs weigh on IndiGo shares after Q3 show

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Mumbai: Shares of InterGlobe Aviation, the operator of IndiGo, slipped 4% on Friday as brokerages struck a mixed note on after the airline's December-quarter results. Analysts flagged near-term pressures from higher costs, currency weakness and regulatory curbs on capacity, while remaining optimistic about the company's long-term prospects

The company posted a 78% drop in net profit from a year earlier, a print that left analysts divided on the stock's near-term prospects even as most brokerages continued to recommend buying, projecting 10-33% upside over the next 12 months.

IndiGo's shares closed at ₹4,715, down 3.95%, while the Nifty 50 finished nearly 1% lower at 25,048.65.

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Motilal Oswal said in its note that despite short-term challenges including reduced capacity, capped fares, rupee depreciation and rising damp leases, IndiGo remains confident in its strategy, supported by a strong domestic network and expanding international routes.

"Going forward over the longer term, the return of grounded aircraft to service, and improved demand are likely to drive performance in the coming quarters," the brokerage said. It maintained a 'Buy' rating with a target of ₹6,100.

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Shobit Singhal, research analyst at Anand Rathi Institutional Equities, said the worst appears to have passed.

"Long term compounding story remains intact, supported by a large fleet size of 440 aircraft, robust orderbook of 900 aircraft and IndiGo's ability to counter short-term exigencies," he said. Others, however, were more cautious.

InCred Equities reiterated its 'Reduce' rating, saying management issued weak guidance for the fourth quarter, noting that 4QFY25 earnings benefited from unusually high tariffs during the 'Kumbh Mela' period. The brokerage expects a 68% year-on-year decline in operating profit before tax next quarter and projects a 13% downside from current levels.

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