Highlights
- Jefferies maintains Buy rating despite near-term challenges for IndiGo.
- Bullish scenario hinges on stronger capacity growth and profitability.
- Rising fuel costs and geopolitical tensions threaten earnings recovery.
IndiGo Share Price: Brokerage firm Jefferies has outlined three possible scenarios for InterGlobe Aviation, the parent company of IndiGo, with its bullish projection suggesting a potential upside of 42 per cent and its bearish scenario indicating a downside of 12 per cent from the reference share price of Rs 4,796.
In its October 16, 2026, dated research report titled ‘What’s ailing IndiGo?’, Jefferies maintained a Buy rating on IndiGo with a base-case target price of Rs 5,840, implying a potential upside of 22 per cent.
The brokerage said IndiGo shares had declined 25 per cent from their August 2026 highs as the prolonged West Asia conflict continued to push up aviation fuel costs, while ongoing fleet additions and lower aircraft utilisation added pressure on operating expenses.
IndiGo share price target: Bull, base and bear cases
Jefferies has outlined three possible scenarios for IndiGo’s share price over a 12-month investment horizon, based on assumptions related to capacity growth, occupancy levels, profitability and valuations.
Under its bull-case scenario, the brokerage has projected a target price of Rs 6,800, indicating a potential upside of 42 per cent from the reference price of Rs 4,796.
In its base-case scenario, Jefferies has maintained a target price of Rs 5,840, suggesting a potential upside of 22 per cent.
Meanwhile, under its bear-case scenario, the brokerage sees IndiGo’s share price falling to Rs 4,200, representing a potential downside of 12 per cent.
These projections are based on different assumptions regarding IndiGo’s operational performance, passenger occupancy, capacity expansion and earnings growth over FY26-FY28. Returns are measured against the report’s reference price of Rs 4,796, not the latest market price.
Under its optimistic scenario, Jefferies has projected IndiGo’s share price reaching Rs 6,800, representing an upside of approximately 42 per cent.
The brokerage assumes available seat kilometre (ASK) growth at a compound annual growth rate (CAGR) of 15 per cent between FY26 and FY28, alongside an occupancy rate of 87 per cent.
It also expects the difference between revenue per available seat kilometre (RASK) and cost per available seat kilometre (CASK) to reach approximately Rs 0.50 in FY27 and FY28.
Under these assumptions, Jefferies estimates a 30 per cent CAGR in profit after tax, excluding foreign exchange effects, over FY26-FY28.
The brokerage has valued IndiGo at 10 times its estimated September 2028 enterprise value-to-EBITDA multiple to arrive at the Rs 6,800 target.
Base case: Why Jefferies maintains Rs 5,840 target
In its base case, Jefferies expects IndiGo’s ASK to grow at a CAGR of 9 per cent between FY26 and FY28, with occupancy remaining between 84 and 86 per cent.
The brokerage assumes a RASK-CASK spread of Rs 0.41 in FY27 and FY28, compared with a negative Rs 0.02 in FY26.
Based on these assumptions, profit after tax excluding forex effects is projected to grow at a CAGR of 17 per cent over FY26-FY28.
Jefferies has assigned a valuation multiple of nine times September 2028 estimated EV/EBITDA, resulting in its base-case target of Rs 5,840.
Bear case: What could push IndiGo shares down to Rs 4,200?
Jefferies’ pessimistic scenario places IndiGo’s share price at Rs 4,200, indicating a potential decline of around 12 per cent.
In this scenario, the brokerage assumes slower ASK growth of 5 per cent CAGR between FY26 and FY28, with occupancy declining to 82 per cent.
It also projects a negative RASK-CASK spread of Rs 0.25 in FY27 and FY28, indicating that unit costs would exceed unit revenue.
Under these conditions, profit after tax excluding forex effects is estimated to grow at just 5 per cent CAGR over FY26-FY28.
Jefferies has applied an eight-times September 2028 estimated EV/EBITDA multiple to derive its bearish target of Rs 4,200.
What are the key risks for IndiGo?
According to Jefferies, the prolonged West Asia conflict remains a major challenge for the aviation sector, particularly because of elevated aviation turbine fuel prices.
The brokerage expects IndiGo’s yields to increase by approximately 25-30 per cent year-on-year in the second quarter of FY27 as airlines pass higher operating costs on to passengers.
However, higher ticket prices have also weighed on passenger growth, prompting airlines to maintain discipline in capacity deployment.
Jefferies further noted that IndiGo received 10 Airbus aircraft in September 2026, taking its calendar-year-to-date deliveries to 39. Continued fleet additions amid lower-than-normal utilisation could increase ownership costs and put further pressure on profitability.
On the positive side, the brokerage expects the seasonally stronger winter schedule to support IndiGo’s capacity growth during the second half of FY27.
Nevertheless, Jefferies believes a sustained earnings recovery remains dependent on the resolution of the West Asia conflict and easing fuel-cost pressures.
The brokerage continues to view IndiGo as well positioned to benefit from India’s long-term aviation growth, supported by its market leadership, expanding international network and cost advantages.