InterGlobe Aviation (INDIGO IN) – Event Update – FDTL norms pose structural challenges – Downgrade to ‘HOLD’
Published on 12 Dec 2025
We cut our EBITDAR estimates by 13%/8%/12% for FY26E/FY27E/FY28E and downgrade INDIGO IN to a HOLD (earlier BUY) with a TP of Rs5,236 (earlier Rs6,332) as we fine-tune our ASKM and employee cost assumptions amid implementation of Flight Duty Time Limitation (FDTL) norms. As of FY25, INDIGO IN’s pilots-to-aircraft ratio was 13.8x (excluding AoG) while average salary per pilot was ~Rs6.8mn. Given the shortage of pilots (~1,213 commercial licenses were issued by DGCA in 2024); fresh hiring could prove to be a challenge. This will not only result in employee cost inflation amid demand-supply mismatch but also hinder ASKM growth, if requisite hiring to meet the new norms does not materialize. Overall, we expect employee cost per ASKM of Rs0.51/Rs0.57/Rs0.62 in FY26E/FY27E/FY28E and have cut our ASKM forecast by ~4-12% over the next 3 years. We expect sales/EBITDAR CAGR of 9%/7% over FY25-FY28E and downgrade the stock to HOLD with a TP of Rs5,236 (10.5x FY27E EBITDAR; earlier 11x) as we believe new FDTL norms pose structural challenge to the cost structure and ASKM growth.
