IndiGo soars 3% thanks to strong Q2 outcomes. What brokerages have to say is as follows

 IndiGo soars 3% thanks to strong Q2 outcomes. What brokerages have to say is as follows

Analysts have cautioned that the result for FY25 would be impacted by the anticipated 300-day grounding of an additional 26% of capacity owing to problems with Pratt and Whitney engines.

The low-cost airline IndiGo's operator, Interglobe Aviation, saw a 3% increase in its shares during morning trading on November 6 as brokerages maintained their optimistic outlook on the business after a successful September quarter performance despite a historically bad time.

Goldman Sachs analysts gave the counter a "buy" rating and a target price of Rs 2,700, citing one-time reversals and one-time compensations as the primary drivers of Q2 earnings.

With a profit of Rs 189 crore in the September quarter, the firm turned a profit after losing Rs 1,583 crore in the same time the previous year. Revenue reached Rs 14,943 crore, up 19.5% year over year.

In addition, UBS issued a "buy" recommendation with a target price of Rs 3,000, praising the airline for its adept handling of the quarter's 15% capacity grounding.

It did, however, issue a warning, stating that FY25 would be impacted by the anticipated 300-day suspension of an additional 26% of capacity.

P&W overhang in FY25, a dismal result 

Similar opinions were expressed by analysts at Kotak Institutional Equities, who predicted that the 40 grounded aircraft could increase to 80 after P&W discovered a new problem with powder metal, a crucial component used to create turbine disks, combustion chambers, and compressor blades for aircraft engines.

The brokerage company said, "We expect P&W issues to impact FY25/26, with FY25 seeing the peak impact of ~6% available seat kilometer (ASK) growth as well as modest backlog on rentals due to secondary leases."

The American engine maker said earlier this year that about 600–700 aircraft engines were probably going to be impacted because of contamination with powder metal that might cause component breakage.

The airline intends to expand its fleet to 350 aircraft by FY24 in order to meet the anticipated expansion in demand. Due to P&W concerns, the management did not provide a figure for FY25.

In light of this, Motilal Oswal analysts gave the counter a "neutral" rating, noting that the firm would face a number of obstacles in the short to medium term.

Growing influence worldwide is advantageous

IndiGo is expanding its reach internationally and has lately added six additional cities in Central Asia.

In Q2, Indigo's robust 34-destination offering saw a 32% YoY rise, while the percentage of international available seats per kilometer (ASK) grew to 26% YoY.

Kotak analysts predicted that when IndiGo expands its operations internationally and establishes aviation hubs over time, significant value would be created for the business and its investors.

In addition, Motilal Oswal said that as the firm expanded its footprint via loyalty programs and strategic alliances (such as a codeshare arrangement with Turkish Airlines), it anticipated capturing a larger portion of growth from its foreign market in the next years.

The stock was up 1.03 percent that extends from the earlier closing at Rs 2,535.15 on the National Stock Exchange at 11:21 a.m.