IndiGo flight cancellations at 4,200 in 8 days! Stock still a Buy?

InterGlobe Aviation Ltd (IndiGo) has been caught in a perfect storm. The unprecedented crisis has led to over 4,200 flight cancellations for IndiGo in the past 8 days, which are 23 per cent of the 2,300-plus daily flights the airline was scheduled to clock in December 2025. But Emkay Global has kept its 'Buy' rating intact on the stock with a target of Rs 6,300, saying operations have improved in the last few days, with relatively low 530 cancellations on December 8.

IndiGo expects normalisation from Wednesday, though the situation is still evolving with respect to the government's action, if any, on the company, as the DGCA probe under way. 

Emkay Global has cut it FY26 revenue estimate by 3 per cent, Ebitda estimate by 8 per cent and ex-forex PBT by 17 per cent. It estimated a 2 per cent impact each on volume and yield, along with some increase in CASK. 

"We lower the target P/E from 23 times to 22 times and cut target by 7 per cent to Rs 6,300. While IndiGo runs the risk of lost reputation and regulatory support, its position in the Indian aviation market is vital and quick normalization of operations should revive the momentum," it said. 

Emkay said a penalty could be a near-term action by the GoI. IndiGo may also be directed to further compensate the affected parties, it said.

"GoI may want to bring in more players, though the global aviation supply-chain scenario remains challenging," Emkay concluded. 

Overall, Emkay estimated 4,800 cancellations during December 1 and December 10 and 2,100 flights per day for the remaining month. This implies a 4 per cent volume impact for Q3FY26. 

"Hence, 16-17 per cent ASK growth YoY guided earlier reduces to 12-13 per cent, while RPK growth is likely to be 11-12 per cent. Q4FY26 ASK growth could be 2 per cent lower at 14-15 per cent vs high-teens growth guided earlier. PRASK guidance for Q3FY26 was flat-to-slightly up YoY earlier, but now, per our checks, could be mildly down. October 2025 was strong, while Nov was more moderate and Dec volatile," Emkay said. 

JM Financial said given the dominant 62 per cent-plus market share in the Indian Airlines industry, the government is unlikely to curtail capacity growth given the growing demands of the Indian economy. Regulatory action including a show-cause notice to the CEO (possible management change) is likely to further dampen stock performance, besides possible impending one-time penalty, JM said.

"Brand perception has taken a short-term knock, but the carrier’s dominant domestic network, limited LCC substitutes and historically strong OTP should allow recovery once operations normalise (expected by mid-Dec). In the near-term, we estimate a 4 per cent  dip in our for 3QFY26 ASK assuming an average 25 per cent ASK cut over a period of 15 days during the quarter," JM said. 

Meanwhile, Moody's said while IndiGo's lean operations offer cost advantages during stable periods, they lack resilience in times of regulatory change. The operational fallout, compounded by winter weather, stranded passengers and exposed gaps in crew planning and oversight.

Although IndiGo’s Baa3 issuer rating with a stable outlook remains unchanged, Moody’s downgraded the airline’s human capital category score from 3 to 4, citing the impact of delayed hiring on operations. It also maintained a governance score of 3, indicating moderate governance risk, and highlighted the absence of employee unions but pointed to the bargaining strength of pilots via broader industry associations.