Analyst says this aviation stock can fly nearly 30% higher — Do you own it?
Kotak Institutional Equities’ commentary comes as it sees supply for the airline industry growing at or below 12% till FY30 and expects IndiGo to add capacity at a similar or faster than the rest of the market over this period.
Shares of domestic carrier IndiGo’s parent firm Interglobe Aviation were in focus on March 19 as brokerage firm Kotak Institutional Equities raised its target price on the stock.
The brokerage, which has maintained its buy stance on IndiGo shares, has raised its target price by over 13% to ₹4,200. This means it expects the stock to surge 29% from the last closing price on March 18.
Kotak Institutional Equities’ commentary comes as it sees supply for the airline industry growing at or below 12% till FY30 and expects IndiGo to add capacity at a similar or faster rate than the rest of the market over this period.
The brokerage noted that the current demand is not yet fully addressed. The brokerage also believes pricing would likely remain healthy over time and less prone to irrationality.
Separately, the aviation regulator Directorate General of Civil Aviation (DGCA) has decided to not extend the June 1 deadline for revised Flight Duty Time Limitations (FDTL) norms that are aimed at mitigating pilot fatigue.
In a note, brokerage firm Morgan Stanley said it expects IndiGo to share details on the impact of the same and that the domestic airline may need additional 10-15% pilots. It also said that with a given tight capacity, some airlines may not be able to get all pilots.
This comes after the regulator issued a revised “flight duty time limitation” on January 8 curtailing night-time flying as well as enhanced weekly rest. The FIA includes Air India, SpiceJet, and IndiGo. Airlines, however, contended that such training would take 8-10 months.
The new flight duty rules rewrite the definition of the night period, extending it by an hour from 12 am-5 am to 12 am-6 am, and limiting the duty period to 10 hours. It also caps the number of landings a pilot can do to two.
Meanwhile, Morgan Stanley has maintained its 6% FY25 capacity growth target for airlines.
(Edited by : Amrita)
First Published: Mar 19, 2024 3:06 PM IST
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