Indigo gains as brokerages stay hopeful on profitability despite airline’s widening losses in Q2

Shares of Interglobe Aviation – the operator of India’s largest airline IndiGo – (NSE: INDIGO) traded positive on Monday as the Street remained optimistic on business prospects of the firm despite widening losses in the September quarter.

IndiGo’s losses surged to Rs 1,583.34 crore in the September quarter owing to higher fuel costs and foreign exchange loss. The airline, also the world's seventh largest in terms of daily departures, reported a loss of Rs 381.8 crore, excluding the foreign exchange loss of Rs 1,201.5 crore, in the latest quarter under review. In the September quarter of last year, the airline had a loss of Rs 1,435.66 crore.

However, the total income of the company rose to Rs 12,852.29 crore in the second quarter of the current fiscal from Rs 5,798.73 crore in the same period a year ago, according to a release. The airline's total expenses jumped to Rs 14,435.57 crore this quarter.

Following the release of Indigo's Q2FY23 numbers, brokerages have revised their targets. Goldman Sachs has maintained 'buy' rating but reduced target from a previous Rs 2,210 to Rs 2,150. Another global broekrage Credit Suisse has maintained an outperform rating with target set at Rs 2,350. Credit Suisse expects strong profitability potential in the second half from IndiGo that may turn tide as risks peak out.

JP Morgan has maintained an overweight stance with target set at Rs 2,200, while UBS has also maintained a 'buy' rating with target at Rs 2,350. It said yields are holding up very well and the airline will fly back to profitability from the third quarter.

Indigo has corrected nearly 16 per cent in the last one year, while the broader Nifty50 has remained positive with marginal gains.

IndiGo stock price opened in the red at Rs 1,774.85 at 9:15 AM and later reversed to a gain, trading at Rs 1,801.85 nearly 0.21 per cent at 10:17 PM on the NSE.

Rival SpiceJet stock traded at Rs 39.80, after opening at Rs 39.60. The company is yet to declare its September quarter earnings.

Meanwhile, frontline indices BSE Sensex and NSE Nifty50, traded with minor gains at 60,992.33 and 18,152.95, respectively.

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