Shares of InterGlobe Aviation fell over 4% in Thursday's trade after foreign brokerage Citi downgraded the stock to 'sell' from 'neutral' with a target of Rs 1,400. The brokerage, however, revised the target price upwards to Rs 1,400 from Rs 1,300 for the parent company of India's largest airline.
The brokerage said market share of the aviation company might have peaked. It is believed that there are many imponderables regarding the sustainability of the September quarter drivers.
Share price of IndiGo- touched an intraday low of Rs 1522.70, falling 4.2% as against the earlier closing of Rs 1,591 on BSE. Stock price of InterGlobe Aviation also touched an intraday high of Rs 1,574.15, after opening at Rs 1,562. The stock has fallen 9.91% in the last 6 days.
InterGlobe Aviation stock has fallen 87% in one week. However, the stock has risen 14% in one month and 16% since the beginning of the year.
The stock trades higher than 20, 50, 100 and 200-day moving averages but lower than 5-day moving averages. Market cap of the firm stood at Rs 56,683.83 crore as of today's closing.
Share of InterGlobe Aviation closed at Rs 1,034.65, rising 10.06% on BSE.
"The airline's market share, which peaked at 60% in July 2020, could trend lower as peer firms ramp-up services," Citi said and added that the target suggests up to 9% potential downside from the prevailing levels.
"The stock rally in IndiGo adequately prices-in the gradual improvement in domestic air traffic and IndiGo's market share gains. The rally ignores the competitors' ramp-up (albeit slow), weak pricing environment, and uncertainty about the sustainability of strong Q2 drivers," the report said.
IndiGo- the largest airline in the country with a fleet size of 274 aircraft had reported a weak set of numbers in Q2 due to halt of operations in the wake of Covid-19 pandemic. IndiGo had reported a net loss of Rs 1,194.80 crore for the September quarter compared with a loss of Rs 1,062 a year ago. Total income declined 64.50% YoY to Rs 3,029.2 crore, but EBITDA increased 59.30% to Rs 408.50 crore.
Centrum Broking in its note said, "We have raised our RPK/EBITDAR estimate by 12%/16% in FY22 to factor the recent strength in traffic recovery and IndiGo's market share gains. The stock trades at 8.8x FY22E EBITDAR and at EV of 13.7 USD cents/TTM RPK - ~15% premium to global peers. We maintain our Buy rating with a revised PT of Rs1638 @ 10x FY22E EBITDAR (9x earlier)."NSE suspends trading in Lakshmi Vilas Bank stock