Morgan Stanley has maintained its ‘Overweight’ rating on InterGlobe Aviation (IndiGo) while keeping its target price at ₹6,359, implying an upside of about 32% from the current market price of ₹4,821.50. The brokerage said that while near-term earnings are likely to remain weak, it continues to believe that IndiGo’s long-term growth story remains intact.
In its latest note, Morgan Stanley flagged that IndiGo has lowered its F3Q26 guidance, reflecting ongoing operational and cost-related pressures. As a result, the brokerage expects near-term earnings softness, which it believes could offer attractive entry points for long-term investors rather than altering the broader investment thesis.
The brokerage has cut its F26E adjusted earnings per share estimate by 15%. It further noted that notional foreign exchange losses and one-off compensation-related costs—estimated at around ₹2 billion—have led to a sharper 31% reduction in its reported F26 earnings forecast. These factors, Morgan Stanley said, are largely non-structural and weigh more on near-term reported profitability than on the airline’s long-term fundamentals.
On valuation, Morgan Stanley highlighted that the stock is currently trading at around 8.3 times FY27E EV/EBITDA, which is broadly in line with its pre-Covid median multiple of 8.5 times. This, according to the brokerage, suggests that current valuations already factor in a degree of near-term weakness.
Despite trimming earnings estimates, Morgan Stanley reiterated its confidence in IndiGo’s longer-term outlook, citing its scale advantage, cost leadership, and dominant position in the Indian aviation market as key pillars supporting sustained growth over the cycle.
Disclaimer: This article is based on a brokerage report by Morgan Stanley. The views expressed are those of the brokerage and are for informational purposes only. This content does not constitute investment advice or a recommendation to buy or sell any securities.