Nomura has ascribed a price target of ₹6,000 for IndiGo, indicating an upside potential of 20.4% from last Thursday’s closing price.
The brokerage has highlighted three key reasons as to why it is bullish on the aviation carrier:
First, IndiGo’s robust orderbook pipeline of over 900 aircraft should enable the company to maintain its domestic market dominance and drive global expansion, Nomura’s note said.
Second, the airline’s lean cost structure should allow it to navigate a price-sensitive Indian market and a high fuel inflation environment. Nomura went on to write that in case of an extended high fuel price scenario, IndiGo will outperform its higher-cost base peers, leading to further market share gains.
Lastly, a volatile environment discourages new participants, while aircraft delivery backlog make it difficult to bring in new supply.
Assuming a partly normalized war scenario in financial year 2028, Nomura expects IndiGo’s revenue to grow at a Compounded Annual Growth Rate (CAGR) of 16% over financial year 2026-2029, while its Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) could grow at a 38% CAGR over the same timeframe.
However, Nomura’s financial year 2028 and 2029 estimates for IndiGo’s EBITDA is 11% and 2% below Bloomberg consensus estimates respectively.
While a complete war normalization is an upside risk for IndiGo, higher fuel prices for longer is a downside risk, according to Nomura, who highlights the outcome of the Gulf war and the consequent fuel price trend as the key swing factor for the airline going forward.
27 analysts have coverage on InterGlobe Aviation, of which 22 have a “buy” rating, three say “hold”, and two have a “sell” rating on the stock. The consensus estimate of price targets implies an upside potential of 13% from current levels. Nomura’s target is not among the highest for analysts who track the airline, as Motilal Oswal (₹6,580), Morgan Stanley (₹6,436), and others have a higher price target.
Shares of InterGlobe Aviation are off the highs of the day, but are trading at the flat line at ₹4,924.5. The stock is still down 3.7% so far this year.
Also Read: IndiGo flights to cost more as airline raises fuel charges from October 6