Shares of InterGlobe Aviation, the operator of IndiGo, were surging on Monday, reaching a record high following robust third-quarter earnings.

Why It Matters: IndiGo’s net profit more than doubled in the December quarter, reaching ₹2,998 crore, driven by sustained demand for air travel and the introduction of a fuel surcharge in October.

This surcharge helped counter the impact of the airline’s grounded aircraft. The airline’s revenue rose by 30% to ₹19,452.15 crore, supported by robust demand and favorable seasonality.

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Operational performance witnessed a significant improvement due to stronger yields and a decline in fuel costs, expanding the EBITDA margin to 28.1% from 22.8% last year. Yield, representing the average fare per mile per passenger, stood at ₹5.34 in the December quarter, a slight decrease from ₹5.38 a year ago.

Analysts’ Viewpoint: Impressed by the strong performance, Nuvama Institutional Equities revised its target price for the stock upward by 30% to ₹3,774 while maintaining a “buy” call. Morgan Stanley also increased its price target to ₹4,145, retaining an “overweight” call, citing IndiGo’s robust balance sheet and healthy vendor relationships.

UBS Securities raised its target price to ₹3,900, also maintaining a “buy” call, anticipating continued positive surprises in yields and a strong outlook for IndiGo.

However, Jefferies held a more cautious view, foreseeing potential yield pressure as Air India introduces its large fleet throughout the year. Jefferies maintains an “underperform” call on InterGlobe Aviation, setting a target price of ₹2,500.

Price Action: IndiGo’s share price was up 3.51% at ₹3,237 in afternoon trade on Monday.

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