IndiGo Shares Decline 3% Amid West Asia Conflict-Related Earnings Concerns

InterGlobe Aviation Shares Fall 2.28% Amid Earnings Headwinds

Shares of InterGlobe Aviation, the parent company of IndiGo, declined by 2.28% to Rs 4,410 per share on Friday. The decline snapped the previous session's gains, when the stock had settled nearly 3% higher.

The fall in share price comes as multiple brokerages have flagged potential pressure on the airline's earnings amid tensions in West Asia. J.P. Morgan highlighted earnings headwinds from higher fuel costs and a moderation in international air traffic linked to the Middle East crisis.

UBS also noted that the ongoing military action between the United States and Iran is likely to weigh on the carrier's available seat kilometre (ASK) in the near term. UBS retained a 'buy' rating on the stock but cut its target price by nearly 13% to Rs 5,480 from Rs 6,170.

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Key Figures:

• InterGlobe Aviation share price: Rs 4,410 (down 2.28% on Friday)
• Target price (revised): Rs 5,480 (down 13% from Rs 6,170)
• Cancelled flights: Over 500 flights to West Asia and other select international destinations
• Estimated loss: Rs 32 crore of profit before tax (equal to about 6% of profit before tax in the fourth quarter)

The airline's earnings remain sensitive to higher fuel costs, a moderation in international air traffic, and a depreciation of the rupee against the US dollar. InterGlobe Aviation had cancelled over 500 overseas flights between February 28 and March 3 due to the ongoing tensions in the Middle East.