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Informist, Wednesday, Jan. 22, 2025

By Anand JC

MUMBAI – IndiGo Airlines' parent company InterGlobe Aviation Ltd. is expected to report a double-digit growth in its revenue for the December quarter on improvement in key operational metrics. However, analysts remain deeply divided on InterGlobe's profit estimates, given the sharp rupee depreciation against the USD in the final weeks of 2024.

InterGlobe Aviation's net profit for the December quarter is expected to be INR 29.97 billion, largely unchanged from last year, according to an average of estimates from six brokerages. However, these estimates vary widely.

The net profit estimates vary from INR 19.74 billion by Nuvama Wealth Management Ltd. to INR 48.23 billion by Elara Securities (India) Pvt. Ltd. Nuvama expects a 34% on-year decline in the bottom line due to aircraft-on-ground costs incurred by the company, which result in higher aircraft lease rentals expense, depreciation, and financing costs.

InterGlobe Aviation's grounded aircraft count at the end of October was in the high-sixties, and was expected to come down to sub-sixty levels by the end of December, the company's executives had said during the September quarter earnings conference call.

Unlike the bottom line, there is more unanimity in estimates on InterGlobe Aviation's top line. The company is expected to post a revenue of INR 216.68 billion for the December quarter, up 11.4% on year and 27.7% sequentially. 

In terms of demand, the December quarter was kind to the Indian aviation industry, as November registered the highest-ever monthly domestic traffic at 14.3 million passengers. However, the quarter also saw a rapid depreciation of the Indian rupee against the US dollar. "Our projections do not include FX loss, which can be considerable given sharp rupee depreciation during the quarter," Prabhudas Lilladher Pvt Ltd. said in a report.

Similar to the net profit, brokerages have wide-ranging estimates for InterGlobe Aviation's earnings before interest, taxes, depreciation, amortisation, and rentals. An average of the estimates shows they anticipate the Gurugram-based company to report an EBITDAR of INR 63.41 billion for the December quarter. Kotak Institutional Equities has projected the lowest EBITDAR at INR 48.14 billion and Elara Securities has estimated the highest at INR 74.91 billion.

OPERATIONAL METRICS

Prabhudas Lilladher expects the low-cost carrier's passenger load factor to increase to 86% in the December quarter from 82.6% in the September quarter and 85.8% in the December quarter of 2023. The passenger load factor helps assess how many seats an airline manages to fill per aircraft. While Motilal Oswal Financial Services' estimate for this metric is 85.9%, Emkay Global Financial Services expects it to grow to 88%. However, Nuvama Wealth Management sees IndiGo's passenger load factor falling 60 basis points year-on-year in the latest quarter.

As for IndiGo's revenue per kilometre, Motilal Oswal anticipates it to increase 12% on-year to INR 35.1 billion for the December quarter. The company's revenue per kilometre in the September quarter was INR 31.6 billion, and INR 31.3 billion in the December quarter of 2023.

According to Motilal Oswal, IndiGo's average fare in the December quarter was up 12% sequentially to INR 6,804, on one-month forward bookings. On 15-day forward bookings, however, the average fare increased to INR 6,670, up 24% sequentially.

Emkay expects InterGlobe Aviation to report a yield of INR 5.30, higher than INR 4.55 in the September quarter but lower than INR 5.48 in the final quarter of 2023. Yield helps investors understand the revenue the airline earns from each passenger per kilometre. Analysts at Prabhudas Lilladher expect IndiGo to report a yield of INR 5.45 in the December quarter.

Between Oct. 26, when it reported its September quarter earnings, and Jan. 22 close, shares of InterGlobe Aviation have fallen 4.5%. When the company reports its December quarter financials on Jan. 24, investors will watch out for its outlook on Pratt & Whitney engine-fitted aircraft and commentary on impending competition.

On Wednesday, shares of the company closed at INR 4,011.50 on the National Stock Exchange, largely flat compared to the previous close.

Following are the Oct-Dec consolidated standalone earnings estimates for InterGlobe Aviation based on reports from six brokerage firms in descending order of the estimate of net profit:

End

Edited by Saji George Titus

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