Bad condition of Indigo
In the year 1975, a film is released in Hindi cinema. Whose name was Sholay. Many scenes of this film are still liked a lot and people often talk about the dialogues. This is one of those dialogues. What will happen to you Kallia? In the film, Amjad Khan says this to Viju Khote who plays the role of Kalia. In today’s time, this dialogue is also fitting very well on the airline Indigo. The way flights are being canceled continuously. Shares are booming. Looking at it one feels that what will happen to IndiGo?
Shares of IndiGo’s parent company InterGlobe Aviation Limited continued to fall on Monday and fell by 10% to Rs 4,842. The airline suffered losses for the seventh consecutive day. As investors reacted to the fallout from the severe air travel disruptions in the country, the stock has now fallen 16.4% in six days, wiping off more than Rs 37,000 crore in market value.
Indigo is facing massive operational disruptions due to the implementation of the new flight duty time limitation. Due to the changed regulations, airlines had difficulty setting crew schedules, leading to a severe shortage of pilots and service almost coming to a halt. Due to this crisis, more than 1,000 flights had to be canceled on Friday alone, which is almost half of IndiGo’s daily operations. Due to this, thousands of passengers remained stranded at airports across the country.
Target price reduced
Because of this, brokerage firms have started reducing the target prices. UBS has maintained buy advice on InterGlobe Aviation, but reduced its target price to Rs 6,350 considering the airline’s lack of preparation for the changed regulations, which led to major operational disruptions. The international brokerage has raised its expenditure estimates for FY26FY28 to take into account the additional crew required to meet the changed regulations and increased costs due to the rupee’s weakness against the dollar. Despite short-term headwinds, UBS believes IndiGo’s long-term growth will remain strong, underpinned by its international expansion, which provides the company with natural protections and margin stability.
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DGCA has given IndiGo CEO Peter Elbers 24 more hours to respond to the show cause notice on the massive flight disruptions affecting thousands of passengers across India. The regulator has asked Albers to explain within 24 hours why action should not be taken under the rules. Despite the recent sharp decline, IndiGo shares are up 7% so far this year.