IndiGo to expand fleet to 350 aircraft by FY24 end, brokerages remain upbeat

IndiGo plans to have a fleet of 350 aircraft by the end of FY24, an increase of 14 percent year-on-year. The airline company also aims to double in size and scale by 2030, it said in a presentation shared at the analyst meet on March 23.

India’s largest domestic carrier has a market share of 55 percent and as many as 490 aircraft are set to join its fleet by the end of the decade, including several Airbus XLRs, which will help it reach Europe.

At 10:50 am, the share price of InterGlobe Aviation Limited, which operates IndiGo, was trading at Rs 1,901, down nearly 0.3 percent, on the NSE.

While IndiGo is ahead of peers in terms of orders, airline management said it does not have clarity on capacity addition outlook by peers. It believes given the strong demand outlook in aviation sector in India, competition can not be ignored.

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IndiGo is also estimated to witness 100 million passengers in FY24, up 18 percent from FY23. It also wants to add 10 to 15 destinations by the end of FY24 to its current tally of 104 destinations, including 78 domestic and the balance being international.

IndiGo has code-share agreements with seven airlines and is looking to add more partners. It is looking to increase its available seat kilometre of ASK (a measure of an airline’s carrying capacity to generate revenue) to 30 percent in the next one to two years. The expansion will lead to a frenzied hiring by the airline.

Also Read: IndiGo embarking on next level of growth: CEO Pieter Elbers

Brokerage firm Macquarie has given ‘outperform’ rating to IndiGo with a stock price target of Rs 2,600. It believes the company’s international expansion will drive its next leg of growth and momentum will sustain into FY24.

CITI has given a ‘buy’ rating with a price target of Rs 2,400. It said the airline’s current yield trends are fairly healthy and adjusted for the seasonality.

Key overhang on the stock may remain from the expected Gangwal’s stake sale, volatility in crude prices and forex, said Kotak Institutional Equities. It has retained its ‘buy’ rating on the airline’s stock.

While Jefferies expects IndiGo to benefit from the recent fall in crude oil price, as fuel accounts for over 40 percent of costs, it is of the view that intensifying competitive intensity could weigh in the medium term. Jefferies has retained ‘underperformed’ rating on IndiGo.

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