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On Monday, JPMorgan analyst updated their assessment of InterGlobe Aviation Ltd. (INDIGO:IN), increasing the price target to INR 4,950 from the previous INR 4,800. The firm continues to recommend an Overweight rating on the stock. This adjustment comes after the airline's third-quarter financial results showed a performance that fell short of JPMorgan and consensus forecasts, primarily due to higher-than-anticipated mark-to-market (MTM) foreign exchange losses.
InterGlobe Aviation, which operates India's largest airline by market share under the brand name IndiGo, reported a Profit After Tax (PAT) of Rs 24.4 billion for the third quarter of the fiscal year 2025, marking an 18% decline year-over-year. However, when adjusted for foreign exchange impact, the PAT stood at Rs 38.5 billion, reflecting a 26% increase from the previous year. This adjusted figure surpassed JPMorgan's estimate of Rs 29 billion.
The airline's revenue yields were better than expected, and the cost of aviation fuel was lower than anticipated, which are positive indicators for the company's financial health. Additionally, the Cost per Available Seat Kilometer (CASK) excluding fuel and foreign exchange remained stable on a quarter-over-quarter basis. JPMorgan anticipates a gradual decrease in costs as the number of grounded aircraft decreases.
Despite the positive aspects, JPMorgan has reduced its Earnings Per Share (EPS) forecast for fiscal year 2025 by 10% to reflect the impact of the higher foreign exchange losses. Nonetheless, the firm's projections for fiscal years 2026 and 2027 have been slightly upgraded.
In summary, JPMorgan maintains its Overweight rating on InterGlobe Aviation while revising the price target upwards, reflecting a nuanced view of the company's financial performance and future prospects.
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