InterGlobe Aviation (INDIGO IN) – Q2FY26 Result Update – FX loss mars profits – BUY
Published on 05 Nov 2025
Despite reporting better than expected FX adjusted EBITDAR margin of 19.3% (PLe 17.6%) we cut our EPS estimates by 3%/6%/3% for FY26E/FY27E/FY28E as we realign our FX assumptions amid sharp rupee depreciation. Unfavorable FX is likely to escalate lease liability obligations and consequently the interest cost & supplementary rentals. On the other hand, as AoG count is unlikely to subside but remain stable at ~40 odd through FY26E, aircraft & engine lease rentals will remain elevated. While we foresee inflation seep into the cost structure in FY26E, we draw comfort from positive commentary on pricing (PRASK to remain flat/grow marginally in 3QFY26E) and upward revision in ASKM growth guidance to early teens for FY26E. We expect sales/EBITDAR CAGR of 12%/11% over FY25-FY27E and retain BUY on the stock with TP of Rs6,332 (11x FY27E EBITDAR; no change in target multiple). Excess FX and ATF volatility is a key risk to our call.
