Lower ATF prices, strong revenue drive Indigo’s Q3: Should you buy the stock?

In Q3FY23, Indigocame in EBITDA of 3,399 crore with a margin of 22.8% Vs. 1,995.5 crore in Q3FY22 with a margin of 21.5%. Passenger numbers increased by 25.8% to 22.3 million, while yield increased by 25.3%. In addition, fuel prices increased by 52.4%, leading to a 41.2% increase in fuel CASK. In addition, CASK pre-fuel increased by 6% 2.76 on account of increase in foreign exchange deficit.

CEO Peter Albers said, “The third quarter The performance was strong both operationally and financially against the backdrop of strong demand for air travel. A wide range of initiatives launched across the organization are starting to pay off.”

Indigo has total cash balance 21,924.7 crores included 10,612.5 crore in free cash and 11,312.1 crore restricted cash by December 31, 2022.

Should you buy Indigo after Q3?

On Indigo’s Q3 earnings, Mitul Shah, Head of Research, Reliance Securities, said, “Indigo delivered a strong 3QFY23 with EBITDAR margin at 21.3% against our estimate of 19.4% led by lower ATF prices and strong revenue growth.” Reported the performance. Front.”

Shah said, “Indigo has reported a strong performance for 3QFY23 due to lower ATF prices. We expect a strong revival in air passenger traffic over the next 2 years and FY22-FY24E (vs 12% CAGR) ASK factors in 33% CAGR in FY18-21 over FY18), and improves EBITDAR margin as crude prices improve 30% from peak levels.”

Shah further added, “We believe IndiGo’s strong balance sheet position along with pricing power will help it retain its market share going forward, which will enhance its overall profitability. Increasing yield and pricing Discipline will support the turnaround despite high fuel prices. This is the best play to capitalize on the fastest growing Indian aviation sector. We currently have ratings on IndiGo.

Meanwhile, Mansi Lal – Research Analyst, Prabhudas Lilladher said, “The domestic passenger traffic has now recovered to pre-COVID levels after two years of crisis for the aviation industry. We believe IndiGo 55 Is in the best position among its peers with over % market share. Airlines have hiked several prices to counter rising fuel costs. Despite this, factors such as repatriation and corporate travel are supporting demand. Crude Oil The reduction in input costs will help margins in the coming quarters.”

Indigo’s share on BSE closed at Rs. It declined 1.28% on Friday to 2,098.55.

As on December 31, 2022, IndiGo has a fleet of 302 aircraft, comprising 23 A320 CEOs, 160 A320 NEOs, 78 A321 NEOs, 39 ATRs, and 2 A321 freighters— an increase of 22 passenger and 1 freighter aircraft during the quarter. net increase.

Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint. We advise investors to do due diligence with certified experts before making any investment decision.