Morgan Stanley has maintained its ‘Overweight’ rating on InterGlobe Aviation (IndiGo) and raised the target price to ₹6,502, citing strong Q4FY25 earnings, a positive demand environment in the second half, and operational tailwinds including supportive fuel prices and international ramp-up.
The airline reported a net profit of ₹3,067 crore in Q4FY25, up from ₹1,894 crore in the year-ago period. Revenue from operations rose 24.3% YoY to ₹22,151 crore, with passenger traffic rising nearly 20% to 31.9 million flyers. CEO Pieter Elbers attributed this spike to a surge in demand during festivals, wedding season, and the Mahakumbh pilgrimage.
EBITDA beat expectations in Q4, driven by 21% capacity growth, yield improvement of 2.4%, and a 6.6% reduction in fuel costs. The load factor rose 1.1 percentage points to 87.4%.
Morgan Stanley noted that IndiGo’s dividend announcement after five years reflects financial confidence, but the company refrained from providing a forward yield outlook. While April data remained strong, the brokerage flagged that May showed early signs of softness in demand, with rising cancellations and slowing traffic growth.
For Q1FY26, IndiGo guided for mid-teen YoY capacity growth, and Morgan Stanley expects some yield weakness. Nevertheless, it raised FY26 EPS estimates by 9%, supported by the current fuel environment and the strategic scale-up of global operations.
Disclaimer: This article is based on the brokerage report by Morgan Stanley. It does not constitute investment advice.
