IndiGo shares: Promoter stake sale may lead to $44 million inflows. Here's how

Shares of InterGlobe Aviation (IndiGo) are likely to see inflows to the tune of $44 million amid reports that the Gangwal family, the promoter group, may sell up to Rs 3,730 crore or $450 million worth shares via block deals, a media report suggested.

Gangwal family has put 1.56 crore shares on the block with a floor price of Rs 2,400 per share, which is a 5.8 per cent discount to the closing price of Monday, an media report citing the term sheet suggested.

Abhilash Pagaria of Nuvama Institutional Equities said FTSE should include additional floating shares within the next few days itself. This inclusion is expected to generate a passive flow of approximately $15 million, involving 0.5 million shares and resulting in a volume impact over 0.5 days.

In the case of MSCI, "Based on our understanding, it is highly likely that the index provider will incorporate additional floating shares during the November review. This anticipated inclusion could lead to an inflow of about $29 million, encompassing 1 million shares and resulting in a volume impact over 1 day," Pagaria said.

As per the report, the Gangwal family is selling $450 million worth of shares in a block deal through bankers Morgan Stanley, JPMorgan, and Goldman Sachs. The family is offering 5.6 per cent of its shares at a floor price of Rs 2,400 ($32.27) per share. IndiGo had a net profit of Rs 3,090 crore ($414.98 million) in Q1, with a revenue of Rs 17,160 crore ($2.30 billion), the report added.

Many brokerages retained their 'Buy' call on the stock post the aviation company's June quarter results.

"We believe IndiGo is well-placed on its own trajectory, given strong air traffic growth, steady net fleet adds and a competition faced with its own troubles," Emkay Global said recently. This brokerage has a target of Rs 3,000 on the stock. Prabhudas Lilladher values the stock at Rs2,855.

IndiGo saw rise in expenses in the June quarter due to engine-related costs, contractual obligations and digital transformation costs, while it fully rolled-back the earlier salary cuts and paid out annual increments too.

In terms of Q2, it plans to focus mainly on monitoring airport charges & maintenance costs.

"A large part of the unit cost increase has already come. Ancillary revenue run-rate had slowed down in Q1 due to lower baggage & convenience fees with some set off from the higher pax revenue, which though should normalise going ahead," Emkay Global said.

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Also read: IndiGo shares in focus as Gangwal family may sell stake today via block deal