IndiGo Q3 Preview: Profit may jump 80% YoY on better yields, higher fares
SECTIONSIndiGo Q3 Preview: Profit may jump 80% YoY on better yields, higher faresBy Akash Podishetti, ETMarkets.comRate StoryFollow usShareFont SizeAbcSmallAbcMediumAbcLargeSavePrintCommentSynopsis
Airline fares witnessed a significant jump in Q3 given a seasonally strong quarter. Despite price corrections, overall ATF prices remained elevated in the third quarter owing to the peak attained in October 2023.
ANIIndia's leading airline operator InterGlobe Aviation (IndiGo) is expected to post strong profit growth for the third quarter ended December, driven by improving passenger yields and increase in fare prices.
Profit for the third quarter is expected to jump as much as 83% year-on-year (YoY), while revenues are seen growing 25% YoY.
Airline fares witnessed a significant jump in Q3 given a seasonally strong quarter. Despite price corrections, overall ATF prices remained elevated in the third quarter owing to the peak attained in October 2023.
"IndiGo’s profitability is expected to improve tracking revival of PAX yields, positive rub-off of higher ATF prices in terms of distance based ‘fuel charge’ charged from customers," said JM Financial.
In the preceding second quarter, IndiGo reported a net profit of Rs 188 crore and revenue from operations increased by nearly 20% YoY to Rs 14,944 crore.
Investors will watch out for outlook on incremental P&W engine-fitted aircraft being grounded in CY24 and commentary on competition coming up in a big way.
IndiGo anticipates aircraft grounding to fall within the mid-thirties range during the fourth owing to P&W issues, on top of the current count of 40 grounded aircraft.
"The most significant monitorable will be sustainable earnings going forward in the near to medium term with pressure mounting on IndiGo on various fronts," Motilal Oswal said.
Here's what brokerages expect from IndiGo's Q3
Kotak Equities We expect a 22% YoY change in passenger count in the quarter, largely driven by higher ASK and higher load factor of 86%.
We expect RASK less CASK (excludes other income) at Rs 0.51 per ASK, against Rs 0.8 per ASK in 1QFY24. The key difference QoQ is the change in crude movement through the quarter (increasing in 3QFY24 versus declining in 1QFY24), half of which we assume to be absorbed by airlines.
Motilal Oswal Expect RPK at 32b (up 31% YoY), PLF at 90.2% (up from 83.3% in 2QFY24) and ASK of 35.5b (up 23% YoY), with recovery post the festive season. According to our database, average fare prices were higher by 27% on 1-month forward bookings and 35% on 15-day forward bookings.
ICICI SecuritiesFor the third quarter, we expect the airline's revenues to grow 25% YoY to Rs 18,713 crore. Net profit for the same period is likely to jump upwards of 80% to Rs 2,612 crore.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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