IndiGo shares up 10% after Q4 loss

The shares of the parent company went up 10 per cent to Rs 1,808. On Thursday, the company's chief executive officer CEO Ronojoy Dutta said that profitability was the top priority for the company, and it led to 5 apiece on the BSE.

He said you have a tug of war but the key to profitability is to keep managing our business on the revenue side because you can keep pushing up fares and then at a certain point demand actually falls off.

The January-March quarter of FY 22 ended in January-March of FY 22, due to a rise in jet fuel prices and higher exchange rate, the comments came on the back of Rs 1,681 crore loss.

Fuel expenses of the airline increased by 68 per cent to Rs 3,220. In Q4 there were 58 crore from 1,914 p.a. In the same period last year, 45 crore were spent. The loss was more than the average estimate of Rs 830 crore from analysts tracked by Bloomberg.

In Q3 the company had reported a small but surprise profit of 128 crore.

The airline earned 29 per cent higher revenue of Rs 8,020. 75 crore at a better yield of Rs 4.24 per kilometer, compared to Rs 3.76 a year ago.

As the airline manages demand revival amid increased competition, analysts are cautiously optimistic.

Edelweiss Securities, for instance, said that it was a near-term proxy play for a re-opening trade led by better yields and pent-up passenger demand. The addition of XLRR fleet and improved cargo business will increase competitiveness over the long term.

The target price was trimmed to Rs 2,256 on a weak outlook on the near-term, but the brokerage has maintained a buy rating on a robust long-term outlook.

Motilal Oswal Financial Services said that they will be stronger than before with various preemptive measures, despite the near-term challenges.

The resurgence of airlines Air India, Spicejet and upcoming Akasa along with established Jet Airways would reduce IndiGo's market share going forward. We value the stock at 7 x FY 24 EEV EBITDAR to arrive at our target price of Rs 1,779. It added that we maintain Neutral due to the limited upside from current levels.

The shares had lost 5 percent of their gains by noon and were up 5 per cent at Rs 1,725 at 11:40 AM. The benchmark S&P BSE SensexBSE Sensex was down 0.54 per cent.