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InterGlobe Aviation Ltd, the owner of India’s largest and most profitable airline IndiGo, had reported a 24% rise in its third-quarter profit.
It reported its highest quarterly profit before tax for the December quarter. The airline, which raised over Rs.3,000 crore last year in an initial public offering (IPO), has a total debt of only Rs.3,930.20 crore, all of which is aircraft-related. And as on 31 December, IndiGo had total cash of Rs.5,746.30 crore comprising Rs.2,097.40 crore of free cash and restricted cash of Rs.3,648.90 crore. But, a day after its record third quarter earnings, shares of IndiGo fell 19.1% on Friday to close at Rs.968.75 apiece. Following that, on Monday, the shares fell by another 6.79% to close at Rs.903. However, at 12:12pm on Wednesday, the shares were trading at Rs.937.75 each, up 3.9%.
“However, IndiGo’s nine-month performance of current financial year was much below estimates due to a sharp fall in profitability in 2QFY16, where profit after tax (PAT) declined to Rs.110 crore, from Rs.640 crore in 1QFY16. As per the management, lower passenger volumes in the 2QFY16 period (usually a lean quarter) forced the company to cut ticket prices (yield was down 9% quarter-on-quarter) in 2QFY16, which dented profitability,” wrote Kotak Institutional Equities Research, a unit of Kotak Securities Ltd, in its note on 22 January.
An aviation consultant, requesting anonymity, said IndiGo’s second quarter revenue and yields were below average even when compared with its smaller rivals.
Domestic brokerage Motilal Oswal Securities Ltd said IndiGo’s nine-month earnings for the current fiscal year was significantly below estimates. What’s more, it has cut its earnings forecast for FY16 by 25% to factor in actual nine-months results.
Why IndiGo shares have taken a beating - Livemint
It reported its highest quarterly profit before tax for the December quarter. The airline, which raised over Rs.3,000 crore last year in an initial public offering (IPO), has a total debt of only Rs.3,930.20 crore, all of which is aircraft-related. And as on 31 December, IndiGo had total cash of Rs.5,746.30 crore comprising Rs.2,097.40 crore of free cash and restricted cash of Rs.3,648.90 crore. But, a day after its record third quarter earnings, shares of IndiGo fell 19.1% on Friday to close at Rs.968.75 apiece. Following that, on Monday, the shares fell by another 6.79% to close at Rs.903. However, at 12:12pm on Wednesday, the shares were trading at Rs.937.75 each, up 3.9%.
“However, IndiGo’s nine-month performance of current financial year was much below estimates due to a sharp fall in profitability in 2QFY16, where profit after tax (PAT) declined to Rs.110 crore, from Rs.640 crore in 1QFY16. As per the management, lower passenger volumes in the 2QFY16 period (usually a lean quarter) forced the company to cut ticket prices (yield was down 9% quarter-on-quarter) in 2QFY16, which dented profitability,” wrote Kotak Institutional Equities Research, a unit of Kotak Securities Ltd, in its note on 22 January.
An aviation consultant, requesting anonymity, said IndiGo’s second quarter revenue and yields were below average even when compared with its smaller rivals.
Domestic brokerage Motilal Oswal Securities Ltd said IndiGo’s nine-month earnings for the current fiscal year was significantly below estimates. What’s more, it has cut its earnings forecast for FY16 by 25% to factor in actual nine-months results.
Why IndiGo shares have taken a beating - Livemint
