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Informist, Wednesday, May 21, 2025

MUMBAI – Moody's Ratings Wednesday assigned a 'Baa3' long-term issuer rating to InterGlobe Aviation Ltd., which runs low-cost carrier IndiGo, with a stable outlook. The agency expects the Gurugram-based company's revenue to grow 9.5-9.8% in 2025-26 (Apr-Mar), but said it could face near-term headwinds due to geopolitical tensions.

Moody's expects InterGlobe Aviation's revenue to grow 12-14% in FY28. It has forecast the aviation company's earnings before interest and tax margin over the FY26 to FY28 period to be in the range of 14-15%. Explaining the rationale behind the rating, Moody's said the company has a dominant market position in the domestic airline sector, cost competitive operations, strong financial metrics, and excellent liquidity. As per the Directorate General of Civil Aviation, IndiGo had a market share of 64% in April, much higher than the Air India group, which is second on the list with a 27% market share.

"The rating incorporates IndiGo's aggressive fleet expansion strategy for domestic and international business(es), aircraft groundings due to engine issues, near-term headwinds from the geopolitical landscape and its relatively short operating history," Nidhi Dhruv, vice president and senior credit officer at Moody's Ratings, was quoted as saying in a report.

IndiGo has ordered around 925 aircraft, which it will fund with a combination of operating and financial leases. "The stable outlook reflects our expectations that IndiGo's operating and financial metrics will remain commensurate with an investment grade rating over the next 12 to 18 months, with some buffer to absorb potential downside risks," Moody's said.

The airline could get a rating upgrade only when India's sovereign rating is upgraded. But such an upgrade also has to be supported by significant strengthening of its operating and financial profile, Moody's said. However, the ratings could be downgraded if the company's EBIT margin falls below 13%. "The rating could also come under pressure if IndiGo's liquidity deteriorates significantly or the company distributes excessive dividends to shareholders," Moody's said.

InterGlobe Aviation reported a net profit of INR 30.7 billion for the March quarter on a revenue of INR 221.5 billion. The airline's shares Wednesday closed at INR 5,461.50 on the National Stock Exchange, up 0.4% from the previous close.  End

Reported by Anand JC

Edited by Nishant Maher

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