Indigo Q1 Results preview: PAT may decline by up to 28% YoY on weak load factor, Delhi T1 crisis

India’s largest airline by market share, InterGlobe Aviation is expected to report a sharp decline in its year-on-year net profit for the three-month period ended June 30, 2024. The profit after tax (PAT) is seen in the range between Rs 2,135 crore – Rs 2,430 crore for April-June according to estimates by a couple of brokerages.

The net profit could, however, go up on a sequential basis, both these brokerages said. While Kotak Institutional Equities sees PAT growth at 28.3%, Elara Capital remains conservative at 3.6% estimated uptick.

The decline is seen on the back of higher fuel cost, weak load factor in May, along with the Delhi T1 terminal roof collapse.

On the revenue front, Elara pegs the number at Rs 18,806 crore which could go up by 12.7% on the YoY basis while Kotak’s estimate stands at Rs 17,851 crore, which is 7% YoY rise.

ETMarkets.com

The company will be announcing its quarterly earnings on Friday, July 26.Here’s what brokerages recommended:Elara Capital expects Indigo’s recurring profit after tax (PAT) to go down by 28% on the YoY basis to Rs 2,135 crore while seeing a 3.6% uptick on the QoQ basis. The net sales is estimated at Rs 18,806 crore which could go up by 12.7% on the YoY basis and 5.5% on the QoQ basis.

The Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) is estimated at Rs 4,358 crore, down by 10.3% YoY and 4.8% QoQ.

“We expect InterGlobe Aviation to report an EBITDA decline of 10% YoY but 5% QoQ increase. YoY earnings decline was driven by higher fuel and non-fuel cost while airfare is set to be flat YoY,” it said in a note.

Kotak Equities

Kotak Equities expects a 21.4% QoQ decline in Indigo’s PAT to Rs 2,430 crore while a 28.3% YoY uptick. Net sales estimated by it for the April-June quarter stands at Rs 17,851 crore, which is expected to go up by 7% YoY and flat (0.1%) on the QoQ basis. EBITDA for the reported quarter is expected at Rs 4,544 crore which may go down by 8.7% on the YoY basis while gaining 13.8% on the QoQ basis.

Kotak Institutional Equities expect a 4% YoY change in passenger count for IndiGo in the quarter and lower YoY load factor at 87.5%. Weak May load factor and impact of Delhi T1 during quarter end are additional overhangs on top of weak aircraft addition during the quarter, the brokerage said in a preview note.

“This reflects in the lower growth at the key Airports (Delhi, Mumbai) as well, resulting in our modest expectations of flat QoQ revenue growth for GMR Airports. While the lower crude price aids for the spread, IndiGo is expected to see continued cost pressures from 4Q on P&W issues and employee cost, lowering our RASK CASK spread assumption to Rs 0.53/ASK from Rs 0.8 in 1QFY24,” the note said.

JM Financial

Indigo’s profitability is expected to improve in Q1 given a higher ASK (available seat miles) growth of 7% QoQ and lower ATF prices (-2.2% QoQ). The airline will also receive compensation from Pratt & Whitney for aircraft grounded due to unavailability of engines, though the exact amount remains undisclosed, JM said.

The note also highlighted what it said was Indigo’s commitment towards increasing capacity by early double digits during FY25 and has placed an order for 30 wide-bodied A350-900 aircraft in 1Q with a focus on increasing international reach.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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