IndiGo Q3 results beat expectations amid industry challenges

IndiGo beats estimates: India’s largest carrier IndiGo reported a robust Profit After Tax (PAT) of Rs 3,000 crore for the third quarter of FY24 (Q3FY24), exceeding market estimates by Rs 540 crore, analysts said. 

The performance was fuelled by lower-than-expected operating and fuel costs, coupled with solid operational metrics. 

Meanwhile, the airline recorded a Passenger Load Factor (PLF) of 85.8 per cent, surpassing anticipated figures. 

Despite facing challenges such as an increase in grounded aircraft, which rose to over 70 in January 2024, IndiGo remains steadfast in its capacity guidance for FY25, brokerage firm Motilal Oswal highlighted in a note. 

The company anticipates a 12-20 per cent year-on-year growth in available seat kilometres (ASK) for the fourth quarter of FY24, driven by new damp leases entered during the third quarter.

While acknowledging ongoing supply chain issues and a slowdown in air traffic growth, particularly in recent months, IndiGo remains optimistic about sustained corporate travel levels, which have surpassed pre-Covid levels.

The company's strategic initiatives to enhance its international presence through partnerships and codeshare agreements with airlines like Turkish Airlines and Qantas are expected to fuel future growth, Motilal Oswal analysts said.

However, amid the resurgence of competitors like Air India and the entry of new players such as Akasa Air, the aviation sector faces intensified competition. 

Despite these challenges, analysts maintain a ‘Neutral’ rating on IndiGo stock, with a target price of Rs 3,300.

IndiGo's strong performance in the face of industry headwinds underscores its resilience and strategic positioning, making it a key player in the aviation sector.

As of 11:08 am, shares of IndiGo were trading 2.43 per cent higher at Rs 3,203 per share.