IndiGo shares rose almost 4% in early trade on August 22 after global brokerage firm Jefferies upgraded the aviation company to a ‘buy’ recommendation and increased its target price.

The firm has raised the target price to ₹5,225, up from ₹4,400 before. This suggests that the analyst predicts a 21% upside from the August 21 closing share price.

Jefferies believes IndiGo’s operating performance has frequently surprised over the last 12-18 months as it navigated cost and capacity headwinds.

The brokerage stated, “IndiGo remains in the driver’s seat, with new avenues of growth…,” and added that the domestic airline’s yields and spreads have remained strong due to the uncertain industry capacity situation and a noticeable rise in supply increases recently. However, issues with global OEMs indicate that aircraft demand and supply may stay balanced.

As of 10:52 am, IndiGo shares were trading 3.55% higher at Rs 4,452.65 on the NSE.

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Interglobe Aviation Ltd, the parent company of IndiGo, reported a profit of Rs 1,894.8 crore for the quarter ended March 31, 2024, marking its sixth consecutive quarter of profitability. The airline’s strong financial performance was driven by robust demand for air travel, which outweighed the impact of rising fuel prices.

IndiGo’s net profit for Q4 FY24 more than doubled compared to the Rs 919 crore reported in the same quarter of the previous fiscal year. The airline’s bottomline met the Street’s projection of around Rs 1,900 crore, as estimated by an average of five brokerages.

The company’s revenue from operations grew by 26 percent to Rs 17,825.3 crore, although it fell short of the estimated revenue of Rs 19,452 crore. Despite the challenges posed by rising fuel prices, IndiGo’s ability to achieve double-digit revenue growth highlights its resilience and effective cost management strategies.

With a market share of over 50 percent, IndiGo continues to be the leading low-cost carrier in India. The airline’s focus on cost efficiency, fleet optimization, and network expansion has been key to its success in a competitive market.

As the Indian aviation industry recovers and domestic air traffic increases, IndiGo is well-positioned to capitalize on the growing demand for air travel. The company’s consistent profitability and market leadership demonstrate its strong fundamentals and ability to navigate challenges in the industry.