IndiGo May Report Best Quarterly Earnings Since Listing
IndiGo’s revenue and operating profit for June quarter are expected to be the highest ever. Here’s why...
InterGlobe Aviation Ltd. is expected to report its best quarterly earnings since listing amid an ongoing spat between promoters of India’s largest airline operator.
IndiGo’s revenue and operating profit for the three months ended June are expected to be the highest ever as yields rose, oil prices fell, and passenger growth remained higher for the airline.
Yields—a measure of average fare per passenger per kilometre—may rise for the third straight quarter due to capacity constraints in the industry after Jet Airways (India) Ltd. shut shop in April, and the global ban on the Boeing 737 Max 8 aircraft.
Besides, a fall in jet fuel prices on lower crude and rise in the number of passengers flying IndiGo as it inducted new aircraft would help the company. A weaker rupee, however, may offset some of these benefits.
IndiGo’s focus on international routes may also boost its yields as fares are generally higher for overseas destinations. In the first two months of the ongoing financial year, IndiGo deployed nearly 30 percent of its incremental capacity on international routes.
Still, investors’ focus will be on the blame game between the promoters and its impact on the carrier’s operations. They will also keep an eye on:
- the impact of IND AS-116—a new accounting standard
- new aircraft induction
- management commentary on sustainability of higher fares
(The reasons for earnings estimates have been compiled from the research reports of SBICAP, ICICI Securities, Elara Capital, Motilal Oswal, Edelweiss, Morgan Stanley, IIFL, Kotak Securities, Prabhudas Lilladher, Spark Capital, Axis Capital and HSBC.)