India’s ICICI Securities raised its price forecast for the shares of InterGlobe Aviation, the operator of the country’s largest airline, a day after the stocks soared to a 20-month high.
Ansuman Deb and Ravin Kurwa, analysts at ICICI Securities, lifted their investment recommendation for InterGlobe to a ‘buy’ in a report published on Tuesday, from ‘hold’ previously, with a revised target of INR2,000 ($27) per share.
They attributed the revision to a ‘strengthening balance sheet,’ backed by the availability of funds, a competitive cost structure and a diversified revenue stream. InterGlobe, which runs the carrier IndiGo, has cash reserves of around INR146bn.
“It should help IndiGo sail through another challenging year in the event of a COVID-19 hit akin to FY20-21,” said the analysts.
Shares extend gain
InterGlobe’s share price extended gains and finished 1.64% higher at INR1,784.30 on Tuesday. The shares had hit a 20-month high of INR1850.65 on the Bombay Stock Exchange’s on Monday, even after the company reported a consolidated net loss of INR11.47bn for the quarter ended March 31. The firm had reported a net loss of INR8.70bn for the corresponding quarter of the previous year.
InterGlobe Aviation has a market capitalization of around INR679.52bn, whereas IndiGo had a 54.3% share of India’s domestic aviation market as of January 2021. The airline’s cost structure remains competitive with the induction of the Airbus aircraft, which constitutes most of their fleet. The air cargo business would help bring in additional revenue for the next fiscal year, according to the analysts.