IndiGo shares rise 3% after Q2 results. Should you buy, sell, or hold?
InterGlobe Aviation (IndiGo) rose 3% to Rs 2,579.4 in Monday's trade on BSE after the airline operator swung to a consolidated net profit of Rs 188 crore from a loss of Rs 1,583 crore a year ago.
Its consolidated revenue from operations increased by nearly 20% YoY to Rs 14,944 crore and was a tad higher than the estimated Rs 14,613 crore.
Sequentially though, the bottomline was far lower than the Rs 3,091-crore profit posted in the June quarter, while revenue declined by more than 10% since the second quarter is typically a seasonally weak one for the sector.
Earnings before interest, taxes, depreciation, amortization and restructuring or rent costs (EBITDAR), surged to Rs 2,446 crore for the quarter, from Rs 229 crore a year ago. The operating margin subsequently expanded to 16.4% from 1.8% a year ago.
At 11.10 a.m., the scrip was trading 1% higher at Rs 2,532.7 on BSE.
Should you buy, sell or hold IndiGo's stock? Here's what analysts say:
BofA Securities
BofA Securities maintained a 'Buy' rating on InterGlobe Aviation and raised the target price to Rs 2700 from Rs 2600 earlier.
The Q2 PAT beat was largely driven by one-off reversals of provisions and one-off compensations.
The additional cost burden of higher wet lease costs, airport charges, interest rates etc. needs to be watched, BofA said in a note.
The global investment bank remains positive on the long-term fundamentals of Indigo being able to maintain market share and grow capacity.
Prabhudas Lilladher
Prabhudas Lilladher retained its 'Buy' rating on IndiGo with a target price of Rs 2,816.
«InterGlobe Aviation (IndiGo) reported better than expected operating performance with FX adjusted EBITDAR margin of 20.2% (PLe 15.8%) led by reversal in provision
