Buy This Aviation Stock For 19% Return: Says Geojit

Brokerage firm Geojit suggests investors buying the stock of InterGlobe Aviation Ltd. (Indigo) for a 19% return, in the near term. Intense vaccination drive, lowering of Covid contaminations, and pick in corporate and revival tourism led to strong revenue growth for the company.

Target Price

The Current Market Price (CMP) of InterGlobe Aviation Ltd. is Rs. 1833. Geojit has estimated a Target Price for the stock at Rs. 2188. The stock is expected to offer a 19% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 1833
Target Price	Rs. 2188
1 year return	19.00%

Company performance

Q3FY22 Revenue grew by 89% YoY, was better than expected supported by 80% load factor and higher fares. Q3 passengers grew by 35% YoY & 30% on a sequential basis. Strong capacity addition was witnessed, as ASK grew by 51% on YoY basis. During the quarter, Indigo has returned 16 older A320ceo aircrafts and added 10 new A320neo. After 7 consecutive quarter of loss, in Q3FY22 Indigo reported profit of Rs.128 crore and EBITDA was up by 112%. Passenger yields improved by 19% YoY to 4.41 led by higher fares.

Comments by Geojit

Commenting about the stock Geojit stated in a recent report, "Strong EBITDA & Profitability due to strong utilization owing to recovery in passenger growth and better yields. The company's capacity expansion, penetration into Tier 2-3 cities, focus on route optimization and likely market share gains post Covid era are key positives. In Q3FY22 aviation sector reported profit after 7 consecutive quarters of losses. With risk of Covid-19 declining, the sector is showing green shoots of revival. We continue to maintain positive view on Indigo considering its strong liquidity position and cost efficient fleet operations."

About the company

Since 1989, InterGlobe Enterprises is headquartered in Gurugram and driven by a workforce of over 26,000 people spread across 28+ countries and 115+ cities globally. InterGlobal Aviation Ltd (Indigo) is one of the most efficient low cost carriers (LCC), with a market share of 54% in Indian aviation sector. The company's passenger traffic growth to pick-up at higher pace starting from FY23 given lower risk of infections, acceleration in vaccination and recovery in tourism & corporate travel.

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Disclaimer

The above stock was picked from the brokerage report of Geojit. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.