InterGlobe Aviation: Target Raised to Rs 4,724 by Prabhudas Lilladher

Prabhudas Lilladher Lowers EBITDAR Estimates for InterGlobe Aviation

Prabhudas Lilladher's research report on InterGlobe Aviation has led to a downward revision of the company's EBITDAR estimates for the fiscal years 2027E and 2028E. The research firm has trimmed its ASKM growth assumptions by approximately 5% and refined its FX and brent crude forecasts for the next two years. This decision was influenced by the recent performance of INDIGO IN in the fourth quarter of fiscal year 2026, which was affected by the Middle East crisis and excessive currency volatility.

The Middle East crisis resulted in approximately 18% of INDIGO IN's capacity being under duress, leading to a net FX loss of INR42.1 billion. Although the situation is improving, with two-thirds of the capacity being restored and normalization expected by June 2026, the surge in brent crude and sharp depreciation of the Rupee are likely to put margins under pressure. Based on these factors, Prabhudas Lilladher expects the Rupee to be at 95/96 per USD and fuel cost to be at INR1.86/INR1.64 per ASKM, resulting in EBITDAR margins of 22.6%/24.0% in FY27E/FY28E respectively.

Furthermore, the ASKM growth guidance of 3-4% for the first quarter of fiscal year 2027E indicates signs of near-term demand weakness. Prabhudas Lilladher is factoring a 5% ASKM CAGR over two years and believes sharp repricing via yield management (PRASK to grow by mid-teens in 1QFY27E) can have a dampening impact on demand.

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Outlook and Recommendation

Given the multiple headwinds arising from capacity bottlenecks, FX volatility, and rising crude prices, Prabhudas Lilladher maintains a HOLD on the stock with a target price of INR4,724 (9x FY28E EBITDAR; earlier 10.5x as we roll forward to FY28E).