Brokerages Go Gaga Over IndiGo's New Aircraft As Shares Gain 2%, Hike Target Prices

Shares of IndiGo parent InterGlobe Aviation were climbing on Thursday after several brokerages hiked their price expectations on the stock after the firm ordered new wide-body aircraft, expected to boost its international operations.

What Happened: Brokerages have increased their target prices on shares of InterGlobe Aviation following the company’s announcement of plans to begin receiving deliveries of widebody Airbus A350 aircraft by 2027, aimed at enhancing international long-haul connectivity.

HSBC raised its target price for the airline stock to ₹4,445 per share, while Nuvama increased its target price to ₹4,288. Both brokerages reiterated their “buy” rating on the stock.

HSBC viewed InterGlobe’s strategic decision to acquire widebody aircraft favorably, citing the company’s order for 30 A350-900s and additional purchase rights for 70 aircraft as a sensible move. However, the brokerage cautioned that it is premature to predict the outcome of this initiative. The A350 aircraft, powered by Rolls Royce’s Trent XWB engine, is scheduled for delivery starting in 2027.

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Nuvama highlighted the favorable industry structure expected to be dominated by IndiGo and Air India, fostering pricing discipline and increasing yields in the long term. The brokerage expressed optimism about passenger growth driven by aggressive capacity expansion, focus on the high-margin international segment, and robust demand.

During a conference call on April 30, InterGlobe’s management highlighted that this aircraft order would enable the company to expand connectivity from India to Southern Europe and potentially to the US and EU, addressing the growing demands of Indian travellers.

Motilal Oswal also emphasised the underpenetrated nature of the Indian aviation market, presenting substantial growth opportunities for domestic airlines. The brokerage underscored India’s potential to become the third-largest aviation market globally, supported by expanding airport infrastructure and significant aircraft orders.

Despite the positive outlook, Motilal Oswal maintained a “neutral” rating on the stock with a target price of ₹4,065, citing potential competition intensification in the aviation sector with the revival of Air India and the entry of new players.

Price Action: InterGlobe Aviation’s share price was up 2.31% at ₹4,074.45 around noon on Thursday.

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