IndiGo Shares Gain 4% After Jefferies, HSBC Upgrade; Analysts See Up To 20% Upside

Shares of Interglobe Aviation- the parent company operating Indigo airlines surged 4 per cent to Rs 4,459 on August 22 after Jefferies and HSBC issued bullish calls, citing strong growth prospects across multiple fronts.

While Jefferies upgraded its rating to ‘buy’ from ‘hold’, HSBC maintained its ‘buy’ rating on the country’s largest airlines by market share.

Global brokerage Jefferies has maintained its bullish stance on the counter and has double upgraded the stock from ‘hold’ to ‘buy’. The company raised the target to Rs 5,225 from the earlier pegged target of Rs 4,400, implying an upside of 22 per cent. The brokerage held that the company has kept in the last 12-18 months. Further, it mentioned that there is a long runway and IndiGo is consistently flying ahead including new avenues.

Jefferies pointed out that though FY24 spreads may not repeat, but should sustain at healthy levels. IndiGo remains in the driver’s seat, with new avenues of growth, it added. The company has also performed well on the operational front and has consistently surprised in past 12-18 months as it maneuvered through cost/capacity headwinds. The precarious industry capacity situation has kept yields/spreads healthy, it added.

HSBC also maintained its ‘buy’ rating on the stock with a raised target of Rs 5,165 per share, implying over 20 per cent gains. The company’s business class launch ends Vistara/Air India monopoly, positioning its product close to the premium economy at Vistara. The measure may not be margin accretive in the near term, but it could reduce leakage of corporate traffic & strengthen positioning of the company in the travel market.

On August 5, IndiGo introduced “IndiGo Stretch,” its new customized business class product. This premium offering will be available on all 12 metro routes operating from Delhi. As part of IndiGo Stretch, each flight will feature 12 business class seats, with curated meals included in the service. The first business class flight will be between Delhi and Mumbai in mid-November.

At about 9:30 am, shares of the company were trading at Rs 4,454, higher by 3.5 percent. The Interglobe Aviation stock has rallied a massive 56 percent in the past month.