InterGlobe Aviation (INDIGO IN): Buy: Rock solid revenue failed to offset cost pressure

研报英文原文证据摘录

InterGlobe Aviation (INDIGO IN): Buy: Rock solid revenue failed to offset cost pressure

Equities ● Airlines

24 July 2026

Competition risk is far off,

if at all

◆ Q1 EBITDAR missed consensus by 27% despite stronger than

expected revenue as fuel and forex pushed costs significantly high

◆ Q2 (seasonally weak quarter) PRASK guided to grow north of 25%

but unit cost could grow at even higher pace resulting in spread to

worsen versus Q1; competition risk less clear

◆ Buy: EPS could rebase higher if fares stay elevated even after fuel

price normalises; TP cut to INR6,040 (from INR6,130)

Rock solid revenue environment but failed to offset cost pressure

Indigo’s Q1 results re-confirm that the revenue environment is staying very strong. Yet, cost

pressure is too sharp even for that kind of strong yields to offset. In Q1, while RASK was up

16.5%, total operating costs were up by almost 36%.

Going into Q2, the company has guided to a PRASK increase of more than 25%, which seems

too strong given that the quarter is seasonally a soft quarter. But there are multiple factors

which could support this kind of yield growth including very tight capacity (Indigo guided to flat

capacity while Air India seems to be cutting capacity by almost 20%), changing network mix

(flying less international routes where the yields are low and rationalising network, i.e. cutting

low-profit routes), fuel surcharge and underlying increase in fares.

More importantly, since Q2 is less leisure heavy and more corporate heavy, Indigo could benefit

significantly from its high corporate market share which means its traffic mix will have more

high-paying corporate customers which are least price sensitive.

But even though demand has turned a bit soft (domestic traffic for the first 20 days of July 2026