Q1 Results: IndiGo Reports Highest Quarterly Profit Since Listing
InterGlobe Aviation Ltd., whose promoters are publicly bickering over governance issues, reported its highest quarterly profit since listing as yields spiked.
Profit surged more than 4,000 percent year-on-year to Rs 1,209 crore in the April-June quarter, the operator of India’s largest carrier IndiGo said in its exchange filing. Analysts estimates compiled by BloombergQuint had pegged the profit at Rs 761 crore. The jump in profit was on account of a lower base in the year-ago period due to foreign exchange losses and higher fuel costs.
- Revenue rose 44.6 percent to Rs 9,420 crore.
- Operating profit, or earnings before interest, taxes, depreciation, amortisation and rentals, jumped more than threefold to Rs 2,656 crore.
- Operating margin expanded 16 percentage points to 28.2 percent.
- Yields—a measure of average fare per passenger per kilometre—rose to Rs 4.08 per kilometer from Rs 3.62 a year ago. That’s the highest jump since listing.
Higher yields, lower oil prices and more passengers flying IndiGo during the quarter as it inducted new aircraft also helped the airline. Yields continued to improve as Jet Airways shut shop, resulting in a spike in airfares. Besides, IndiGo’s focus on international routes boosted its earnings.
“We are particularly pleased with this quarter because it demonstrated our ability to grow rapidly while simultaneously expanding our margin performance,” Ronojoy Dutta, the airline’s chief executive officer, said in a media statement. “Strong passenger revenues, along with a sharp improvement in cargo performance, were key drivers of this improved profitability.”
Still, a bitter tussle between promoters Rakesh Gangwal and Rahul Bhatia has soured investor mood over the past one week. Gangwal accused co-promoter Bhatia of questionable related party transactions, and violations of governance regulations and the company’s code of conduct. InterGlobe Enterprises Pvt. Ltd., owned by Bhatia, has on its part said the allegations are “much ado about nothing”.
Gangwal also wrote to the Securities and Exchange Board of India seeking its intervention in the matter. The Indian government, too, told the regulator to go deeper into the promoter dispute and probe the role of all board members and entities associated.
InterGlobe Aviation has received letters from SEBI and the Ministry of Corporate Affairs seeking its comments on the complaints filed by Gangwal, according to the filing. “The company will respond to the authorities concerned within the prescribed timelines and believes that the aforesaid matter doesn’t impact its financial results,” it said.
Board Discussed Gangwal’s Issues
One of the issues raised by Gangwal was the absence of a female independent director on the board, despite being mandated by the Companies Act.
The board discussed a range of issues today, including the size and members of the board, Dutta said at a conference call with analysts. “I’m mentioning the independent women director issue because it is a compliance issue with the law. It’s very urgent for us to resolve this and we hope to have a solution tomorrow.”
The board meeting will continue tomorrow where a final decision will be taken.
On the EY report cited by Gangwal’s letter, which had found some procedural irregularities in related party deals, Dutta said they have submitted the report to the Securities and Exchange Board of India.
“We’re responding to SEBI on the enquiry and we have given the report to them. We don’t plan on making it public at this time.”
- IndiGo plans to increase its capacity by 28 percent on a yearly basis in the second quarter of the ongoing fiscal.
- Total cost net of finance income per available seat kilometer, or fuel CASK, was down 11.8 percent year-on-year to Rs 1.34. That’s the biggest drop in at least 12 quarters.
- Other income rose 20 percent over last year to Rs 367 crore.
- The company made foreign exchange gains worth Rs 44.6 crore against a forex loss of Rs 246.1 crore a year ago.
- It also added 18 aircraft during the quarter, taking its total fleet to 235.
- IndiGo’s total cash balance increased 13.3 percent sequentially to Rs 17,337 crore in the June quarter.
- Its total debt, excluding capitalised lease, fell 2.8 percent over the preceding quarter to Rs 2,361 crore.
Shares of InterGlobe Aviation closed 0.3 percent higher ahead of the results announcement compared with a 1.5 percent fall in the Nifty Index.