IndiGo - Supply Outlook, Rising Fuel Prices To Limit Spreads; Risk-Reward Unfavorable: ICICI Securities
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ICICI Securities Report
Rising brent crude prices and no major structural capacity cuts may limit the spreads of InterGlobe Aviation Ltd. to Rs 0.34 in FY23, as per our estimates.
Our spreads include depreciation and interest cost.
Entry of new players, delay in recovery of international travel, longer absence of high yielding corporate travel and low cash balance do not provide any rationale for increase in multiples for IndiGo.
Our earnings cut is driven by higher brent crude prices of $65/ barrel of oil in FY23 compared to $60/ barrel of oil earlier and current brent crude prices of $78/ barrel of oil.
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