The stock has gained more than 9% over the last two trading days.
The rally comes as several concerns weighing on the aviation sector begin to ease following signs of improving geopolitical stability in West Asia.
A sharp correction in crude oil prices has emerged as a key positive for airlines. Crude has retreated close to pre-conflict levels, improving the outlook for fuel expenses, which account for nearly 30% of an airline’s operating costs.
The Indian rupee has also strengthened and moved below the ₹95-per-dollar mark, easing concerns of a potential depreciation towards ₹100 against the US currency.
Analysts also pointed to improving prospects for international operations. While IndiGo has not yet resumed services affected by the recent disruptions, several global carriers have announced the restoration of flights to the Middle East.
This has raised expectations of a gradual normalisation in regional travel and a reduction in airspace-related disruptions on Europe-bound routes. The Middle East and Europe together account for nearly 18% of IndiGo’s capacity.
According to analysts, lower fuel costs, easing operational challenges and resilient ticket prices could support stronger yields and profitability in the coming quarters, particularly if fares remain elevated despite the decline in input costs.
On Wednesday, HSBC reiterated its ‘Buy’ rating on IndiGo with a price target of ₹5,545.
The brokerage said IndiGo’s competitive positioning is strengthening as rival Air India continues to face operational challenges. HSBC also expects the combination of firm airfares and lower fuel prices to support earnings growth.
According to the brokerage, industry capacity constraints are likely to keep fares elevated, while fuel surcharges may not be fully withdrawn, providing an additional boost to revenue and margins.
With inputs from Devayani Vibhute
