While most brokerages retained their positive stance, they flagged near-term pressure from elevated fuel costs and geopolitical uncertainties.
IndiGo reported a 20% year-on-year increase in revenue to ₹24,584 crore during Q1FY27, supported by a 21% rise in passenger yields as higher ticket prices and fuel surcharges boosted realisations.
However, the higher revenue was offset by a sharp increase in costs. Fuel expenses surged 86% YoY to ₹10,832 crore, accounting for 44% of revenue, compared with an average of around 30% in FY26. As a result, EBITDAR declined 33% year-on-year, while the airline swung to a net loss of ₹238 crore from a profit of ₹2,176 crore a year earlier.
Despite elevated fares, demand remained resilient, with passenger traffic broadly flat year-on-year. The airline expects pricing strength to continue, guiding for over 25% year-on-year growth in passenger revenue per available seat kilometre (PRASK) in the September quarter.
Management, however, struck a cautious tone for the near term, citing elevated crude oil prices and seasonal weakness. The airline expects the second quarter to remain challenging and maintained its FY27 capacity growth guidance at single-digit available seat kilometre (ASK) growth.
What brokerages said
Investec retained its ‘Sell’ rating with a target price of ₹4,050, making it the only major brokerage with a bearish stance on the stock. The brokerage said the June quarter was impacted by elevated fuel costs and disruptions arising from the West Asia conflict, which constrained capacity and pushed up aviation turbine fuel (ATF) prices.
While passenger yields rose 21% year-on-year to record levels, Investec noted that operating metrics weakened due to lower passenger load factors and rising costs. It expects profitability to remain under pressure amid continued volatility in fuel prices, currency movements and geopolitical developments.
Kotak Institutional Equities maintained a ‘Buy’ rating but lowered its target price to ₹5,900 from ₹6,300. It said the earnings miss was primarily driven by unexpectedly high fuel costs.
The brokerage believes IndiGo successfully passed on most of the increase through higher ticket prices and expects pricing to remain supportive, aided by sustained capacity cuts by Air India.
JPMorgan retained its ‘Neutral’ rating with a target price of ₹4,740. The brokerage said the quarter missed estimates as both fuel and non-fuel costs came in higher than expected. While management has guided for stronger yields in Q2, JPMorgan expects earnings volatility to persist through the rest of the year due to elevated fuel costs and slower capacity growth.
Citi maintained its ‘Buy’ rating with a target price of ₹5,800. It said the quarter was significantly below expectations at the EBITDA and profit levels despite strong pricing. While higher ticket prices and improving unit revenues remain encouraging, the brokerage believes these gains continue to be offset by elevated fuel costs.
