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Will Interglobe Aviation Ltd reach the skies?

Stock Data

Ticker: INDIGO

Exchange : NSE and BSE

Industry: Aviation

The shareprice increased by 0.16% based on the previous closing price of Rs 2,004.5 as on 25 Aug, 2022, 03:58 PM IST. It has 52 week high of Rs 2,380.00 and 52 week low of Rs 1,511.75. The market cap stood at Rs 76,077.08 Crores. The P/E and P/B ratio stood at zero. The debt stood at Rs 2,505.62 Crores. EV/EBITDA stood at 21.21.

Performance Analysis

There has been a sales growth of 77.12% in last 1 year. The profit growth stood at -5.85% in last 1 year. In last 1year the ROE stood at 0% and ROCE stood at -1728.45%. The company need to focus more on ROE and ROCE improvement.

Price Performance

In 1 week the share price has gone down 3.89%. In last 1 month it has increased by 8.55%. In last 3 months it has increased by 17.09%. The price increased by 7.66% in last 6 months.

Financial Snapshot

The total revenue stood at Rs 13019 crores. It increased by 310.69% YOY and 58.61% QOQ. The total expenditure stood at Rs 12257 crores. There has been an increase in expenses by 174.08%. The rise in expenditure is mainly due to increase in fuel cost, employee cost, airport and aircraft rents. Profit After Tax stood at – Rs1064Crores. The overall increase in expenditure has resulted in a negative PAT. Aircraft fuel cost contributes 43% of the total expense. There has been a loss due to foreign exchange loss which stood at Rs 1425crores. The yield increased to Rs 5.24.

Shareholding Pattern

Share HoldingJun-21Sep-21Dec-21Mar-22Jun-22

The promoter holding has increased to 74.77% for June 2022. There is zero promoters pledge. The FII holding declined to 16.72%. The DII holding increased to 6.38%. The public holding for June-22 stood at 2.14%.

Company Description– Interglobe started its business in 1989. The company has its headquarters in Gurugram. The management includes VenkataramaniSumantran, Chairman & Ind.Directorand  Ronojoy Dutta, WholeTime Director & CEO.The company has a fleet of 281 aircraft as of 30th June 2022. It has operated 1,667 daily flights during the quarter. During the quarter it has provided services to 73 domestic destinations and 20 international destinations.

Industry AnalysisAccording to International Air Transport Association (IATA), India will be the world’s third-largest air passenger market by 2030.COVID has impacted the sentiments of people, which has affected the habits of people. The booking for airlines, hotels have decreased significantly in 2021 and 2022. Moreover, there was the emergence of omicron variant and restrictions were imposed by several countries on travel. This caused the revenue to steep downward. COVID vaccination is the game changer.

Moreover,Government of India has opened commercial and international flights effective 27th of March, which has helped to revive the international travel demand as well. Due to the rising demand in the sector there has been an increase in number of airplanes operating in the sector. The number of airplanes is expected to reach 1,100 planes by 2027. As on FY22 the domestic passenger traffic stood at 166.8 million with an increase of 58.5% YoY and international passenger traffic  stood at  22.1 million with an increase of 118% YoY.

The government has taken measures to increase the number of airports. Till date there are only 129 operational airports and it is expected to reach 190-200 by FY40.

Future of Airline Industry– At present the debt level of this industry is very high. The outbreak of pandemic, travel restrictions and increase in fuel price resulted in a huge loss for this industry. The debt equity ratio and interest coverage ratio are the major concern for this industry. The industry needs to improve the debt equity ratio. It should emphasize more on reducing the additional costs. However the aviation industry is slowly picking up post Covid and according to the recent estimates the demand for air transport will increase by an average of 4.3% per annum over the next 20 years. If this sector starts growing again it will contribute 15.5 million in direct jobs and $1.5 trillion of GDP to the world economy. It is anticipated that by mid-2030s almost 200,000 flights per day are expected to take off and land all over the world. Moreover the aviation industry is also moving towards Artificial Intelligence (AI) and Big Data. This can be a game changer in future.

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