Jefferies has upgraded IndiGo (Interglobe Aviation) to a “Buy” rating from its previous “Hold,” raising its target price to ₹5,225 from ₹4,400. This revised target represents a potential 21% upside from the closing price today of ₹4,299 on the NSE.
Jefferies’ bullish outlook on IndiGo comes after the airline consistently outperformed expectations over the last 12-18 months, despite facing significant operational challenges. The investment firm noted several key factors that have driven IndiGo’s strong performance, including the airline’s ability to mitigate the impact of engine-related groundings, securing better-than-expected compensation from original equipment manufacturers (OEMs), and effectively managing cost headwinds such as expensive secondary leasing, rising airport charges, and pilot compensation inflation.
Furthermore, IndiGo has maintained healthy yields and spreads, benefiting from a tight industry capacity situation, said Jefferies. While global supply chain challenges for aircraft manufacturers persist, IndiGo is well-positioned to capitalize on new growth opportunities, keeping it at the forefront of the aviation industry, brokerage added.
Jefferies has also raised its earnings per share (EPS) estimates for FY26 and FY27 by 6-7%, driven by an improved outlook on spreads between revenue per available seat kilometer (RASK) and cost per available seat kilometer (CASK). The firm now expects a RASK-CASK spread of 47-49 paise in FY25-27, compared to 58 paise in FY24, still comfortably above the historical average of 42 paise seen between FY11 and FY18.
