InterGlobe Aviation (INDIGO IN) – Q1FY27 Result Update – ATF inflation dents profit – HOLD
Published on 24 Jul 2026
INDIGO IN reported weak operational performance with FX adjusted EBITDAR margin of 15.8% (PLe 20.1%) as fuel CASK increased 80.4% YoY to INR2.49 (PLe INR2.21) due to sharp increase in ATF price. In addition, inflation has seeped into the cost structure with CASK (ex-fuel & ex-forex) rising by 9.5% YoY to INR3.43 amid adverse FX movement. While attempts are made to cover excessive fuel & FX volatility via repricing (yield up 21.3% YoY to INR6.0) it is proving to be insufficient given inflation is quite steep in nature. Nonetheless, repricing is not having a material detrimental impact on demand (load factor down 130 bps YoY to 83.3% in 1QFY27). In FY27E, growth will be driven by pricing and if yields show signs of stickiness once volatility in fuel & FX stabilizes, the stock could re-rate. We expect 8% ASKM CAGR over the next 2 years with FX adjusted EBITDAR margin of 22.5%/23.5% in FY27E/FY28E and maintain HOLD on the stock with a TP of INR4,520 (9x FY28E EBITDAR; no change in target multiple) as we await signs of yield stickiness to emerge.
