Citi has reiterated its Buy rating on InterGlobe Aviation (IndiGo) with a target price of ₹5,200, citing positive demand trends and capacity utilization improvements.
According to Citi:
- Air traffic demand is picking up, supported by IndiGo’s strong market share and higher passenger load factors (PLFs).
- Demand is expected to remain robust in Q4FY25, driven by the Maha Kumbh event, which is likely to increase traffic to major airports in Uttar Pradesh.
- This is expected to boost yields and support overall revenue growth.
However, Citi highlights currency risks as a key concern, noting that INR depreciation against the USD could impact IndiGo’s Q4FY25 results by:
- Increasing operational expenses, as a significant portion of costs are USD-denominated.
- Resulting in mark-to-market (MTM) losses on capitalized lease liabilities.
Despite the currency headwinds, Citi remains optimistic about IndiGo’s growth prospects, citing its dominant market position and robust demand outlook.
