Shares of InterGlobe Aviation, the parent firm of IndiGo airlines nosedived 10% on Monday after the company swung into a massive loss in the second quarter.

What Happened: The carrier posted a net loss of ₹986.7 crore in the quarter ended September, falling behind estimates of a ₹234 crore loss. Meanwhile, the airline operator's revenue from operations climbed 13.6% to ₹16,969.6 crore, beating analyst expectations of ₹16,743.5 crore.

The carrier faced financial strain due to increased fuel and labour costs, along with problems related to Pratt & Whitney engines, which have grounded a portion of its fleet and driven up expenses.

What Do Brokerages Think: Goldman Sachs had a “buy” recommendation for the stock with the target price reduced to ₹4,800.

In Q2, the loss per share at ₹25.7 and the profit before tax fell below Goldman Sachs’ estimates. The available seat kilometres (ASK) and revenue passenger kilometres (RPK) were generally as anticipated, the brokerage said.

The brokerage said yields, which grew 2.5% were above the brokerage’s flat forecast, leading to a revenue beat. The CASK figure was also higher than expected, primarily due to increased fuel and lease expenses, it added.

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Jefferies was optimistic about the firm even as Q2 profit missed its estimates by a large margin. Increased costs from groundings and related inefficient capacity adjustments drove the loss, it said.

Motilal Oswal had a “neutral” call for IndiGo with a target price of ₹4,130. The net loss was primarily driven by seasonality, it said, but remained optimistic because the firm’s guidance remains unchanged.

Currently, more than 60 aircraft are grounded due to issues with Pratt & Whitney engines, the brokerage noted. Management anticipates this number will decrease to the mid-40s by FY26, Motilal Oswal noted.

Kotak Institutional Equities said that the miss in Q2 was driven by transient issues such as groundings, associated compensation, and unexpected fuel inflation. Another challenge was the increased seasonality, compared to the significant rise in demand and supply in the previous year, it said.

However, the brokerage said demand trends were healthy and sees indiGo’s blue-chip loyalty program, which can increase customer loyalty and help maintain higher yields while reducing dependency on ticketing platforms, as a positive development.

Kotak cut the firm’s FY27 estimate by about 10%. It had a “buy” rating for the stock with a target price of ₹5,200.

Price Action: IndiGo’s shares crashed 10% to ₹3,929.50 on Monday morning.

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