IndiGo's promise to raise fares boosts the stock by more than 10%

InterGlobe Aviation shares rose more than 10% to £1,816.20 after the company announced it would raise fares in a bid to return to profitability after a loss in the March quarter.

The company, which operates India's largest airline IndiGo, posted a consolidated net loss of £1,681 million for the quarter, compared with a net loss of £1,159 million a year earlier.

     

Analysts said the March quarter reflected the impact of the Omicron variant of Covid-19 in January and February, but pent-up demand will continue to support the airline's near-term growth.

With its tight cost structure, IndiGo is better positioned in the current inflation scenario in the airline industry, analysts said.

JP Morgan took the stock from neutral to overweight and raised its price target to Rs 2,000 from Rs 1,825 on better-than-expected demand and performance.

"IndiGo's strong volume growth potential, combined with a potentially lower cost curve, is attractive over the long term. IndiGo has maintained its fixed cost competitiveness and balance sheet strength relative to its group. peers over a long cycle, and the advantage should remain structural. Said JP Morgan. The year-to-date underperformance against Nifty should end strong demand, JP Morgan said.


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