Kotak Institutional Equities forecast six months of more pain for IndiGo airline amid supply constraints, lowering its target price on the stock.

What Happened: Kotak had a "buy" rating for InterGlobe Aviation as it sees upside for the company's stock gradually after a near-term downturn. However, the brokerage slashed its target price on the budget carrier to ₹5,400 from ₹5,700.

The brokerage forecast pain for the aviation firm for the next six months owing to a delay in the delivery of parts from original equipment manufacturers. After this period, the research firm expects large parts of its grounded fleet to return to operation from December.

Issues with engine make Pratt & Whitney have affected IndiGo since January. As of February, more than 70 of its aircraft were grounded.

See Also: Mutual Funds Dump High-Flying RVNL, Mazdock Shares In June

"Considering the 8-10-month period communicated for P&W to give back the engines, IndiGo should start getting back a meaningful part of the AOG starting December," Kotak said.

In April, IndiGo had placed orders for 30 wide-body crafts from Airbus. In June, the aviation company placed orders for 500 aircraft from the French company.

However, these supply issues are likely to have an impact on IndiGo's key metrics for FY25, Kotak said. The brokerage cut estimates for InterGlobe Aviation's profits after tax (PAT) by 8% and 5% for FY25 and FY26, respectively. The company will likely record a profit after tax of ₹89,491 versus ₹96,984, Kotak expects.
 
Price Action: Shares of interGlobe Aviation were up 1.55% at ₹4,398.90 on Monday afternoon.

Read Next: Govt Unlikely To Roll Out Another Round Of Semiconductor Subsidy This Year Even Though $10B Scheme Dries Up: Report