InterGlobe Aviation Ltd. (IndiGo) shares will be under scrutiny on Monday morning as CNBC-TV18 claimed that co-founder Rakesh Gangwal is reportedly considering selling up to 5.8% of the airline for about Rs 6,600, with a base price of Rs 2,925 per share. This was greater than a 3.3% planned share sale earlier, according to report.
On Thursday of last week, IndiGo's shares ended at Rs 3,101.55 a share. At Rs 2,925, the floor price represents a 5.69 percent reduction from the previous closing price.
A'reduce' on IndiGo was recommended by InCred Equities in a recent letter on its high-confidence investment ideas. According to the statement, the additional 35 planes that were grounded in Q4FY24—or 5% of the industry fleet—would not have an effect on tariffs since IndiGo would lease more aircraft to reach its capacity objective, leaving rivals unaffected and with an underutilized fleet. It anticipates that in FY26, IndiGo will have its full fleet in service.
As a result, tariffs will be lowered and industrial capacity will rise by 14%. In FY26F, we factor Re0.11 RASK - CASK (as in the average for FY17–20). The company is valued at 8.5 times FY26 EV/EBITDAR, with a target price of Rs 2,000. This compares to a median multiple of 8.8 times (Nov 2015 to date, omitting the Covid-19 pandemic period). We have a REDUCE recommendation on the stock. It stated, "We feel the small discount is justified because the timeline for resolving the grounded fleet is uncertain."
According to InCred Equities, the difference in RASK-CASK between IndiGo and Air India/Vistara throughout FY20 to date has shrunk, and the company's ASK would increase in line with the industry compared greater before. In February 2022, Gangwal announced his resignation from the InterGlobe Aviation board and his intention to gradually reduce his family's ownership interest.
