Up 18% in a month! Falling crude isn't the only tailwind for this multibagger stock

Shares of InterGlobe Aviations Ltd, the parent company of budget carrier IndiGo, were seen near Rs 5,000 mark on Thursday, commanding a total market capitalization close to Rs 2 lakh crore. The stock has surged more than 18 per cent in the last one month on the back of easing geopolitical tensions, which has resulted in fall in the crude oil prices.

Brokerage firms continue to remain mostly positive on IndiGo, citing its scale, market share gains and expansion plans support its long-term outlook, even as fuel costs, currency movements, delivery schedules and geopolitical developments may shape performance in the near term. They see up to 17 per cent upside potential in the stock, despite tripling in last three years.

Brokerage firms believe that InterGlobe Aviation remains positioned to benefit from India’s aviation growth, even as near-term conditions stay mixed. The reports highlighted IndiGo’s rising domestic market share, long-term capacity expansion plans and expected support from airport additions, stronger infrastructure and higher demand for domestic and international air travel.

At the same time, the brokerages said FY27 could remain volatile because of capacity bottlenecks, aircraft delivery delays, fuel and currency swings, and uncertainty around international operations. While growth in available seat capacity is expected to stay in single digits in the near term, both Emkay and PL Capital said pricing is likely to play a bigger role in earnings growth.

SBI Securities said IndiGo’s domestic market share has risen to 64 per cent from 55 per cent in March 2022, helped by disruptions at rival carriers because of grounded aircraft, delivery delays, financial stress, pilot and cabin crew shortages, and airspace closures. It said the airline’s low-cost model has helped it manage headwinds including volatility in ATF prices and currency, weather and geopolitical disruption, and engine-related groundings.

SBI also said easing concerns linked to the Middle East could support crude and ATF prices, aircraft lease payments and the reopening of suspended routes to Central Asia and Europe. It added that new international airports at Noida and Navi Mumbai could help IndiGo add capacity and meet rising demand.

Emkay Global, citing IndiGo’s CY26 Analyst Day, said the airline reiterated a strong aviation growth outlook for India, with passenger traffic expected to double by FY35 from 246 million in FY26. It said the airline has set FY30 targets of about 300 billion ASK, a fleet of more than 550 aircraft, nearly 200 million passengers and around 3,000 daily flights.

Emkay said narrow-body aircraft would remain core to the model, though new configurations would be introduced. It added that management expects FY27 passenger numbers to remain around 125 million, while pricing, normalisation in the Middle East sector, XLR induction, and product upgrades in meals, seats and Stretch could support earnings.

PL Capital said management has also outlined plans to reach 300 billion ASKM by FY30, raise the share of owned and finance-leased aircraft to 30-40 per cent of the fleet mix, and increase the international ASKM share to 40 per cent by FY30. It said IndiGo aims to expand hedge cover to 33 per cent of net balance sheet exposure by FY27-FY28 amid foreign exchange volatility.

PL Capital expects near-term growth to be price-led, with PRASK likely to rise by the mid-teens in the first quarter of FY27 amid sharp repricing due to ATF volatility. Emkay retained a 'buy' rating with a target price of Rs 5,200, while PL Capital maintained hold' 'with a target price of Rs 4,724. SBI flagged fuel price and currency volatility, aircraft delivery delays, airspace closures and weather disruption as key risks, but gave a target price of Rs 5,845.