Accumulate InterGlobe Aviation; target of Rs 4315: Prabhudas Lilladher

Prabhudas Lilladher's research report on InterGlobe Aviation

Indigo has placed a firm order of 30 Airbus A350-900 aircrafts with an option to purchase additional 70 aircrafts for possible future needs. We believe this order is likely to deepen Indigo’s international penetration as wide body aircrafts have twin aisles and are typically used for medium to long haul flights. India just has 70 wide body aircrafts and the long haul market is significantly under-represented at the moment. Thus, entry into wide-space would lend IndiGo a first mover advantage to tap the vast potential in international markets. We maintain our estimates as delivery is set to begin from 2027 and will be staggered in nature.

Outlook

Overall, we expect revenue CAGR of 12% over FY24E-FY26E with EBITDAR margin of 24.9%/23.5%/22.1% in FY24E/FY25E/FY26E (lower in last year due to higher fuel cost). Retain ‘ACCUMULATE’ with a TP of Rs4,315 (earlier Rs4,079) as we increase our EV/EBITDA multiple to 9.0x (earlier 8.5x) given 1) strong visibility on international expansion and 2) reduced threat of competitive intensity as Go First’s revival chance have faded.

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InterGlobe Aviation - 02052024 - prabhu