IndiGo soars 5% after Q4 results. What Goldman Sachs, Jefferies and others are saying

Shares of InterGlobe Aviation, the operator of budget carrier IndiGo, rallied as much as 5% to their day's high of Rs 4,634 on the NSE on Monday despite reporting a net loss of Rs 2,536 crore for the fourth quarter of FY26, compared with a net profit of Rs 3,067 crore in the corresponding period last year.

Revenue from operations, however, edged up 1% year-on-year (YoY) to Rs 22,438 crore.The airline said its operational performance during the quarter was affected by disruptions linked to the ongoing conflict in the Middle East.

Capacity, measured in available seat kilometres (ASKs), increased 3.4% YoY to 43.6 billion.Passenger traffic stood at 31.6 million during the quarter, marking a marginal decline of 1.1% from a year earlier.

EBITDAR, excluding foreign exchange impact, stood at Rs 6,435 crore, down from Rs 6,862 crore in the corresponding quarter last year.

The EBITDAR margin narrowed to 28.7% from 31%.IndiGo shares: Should you buy, sell or hold?Goldman Sachs maintained its Buy rating and target price of Rs 5,200, implying an upside of 18% from current levels.

The Wall Street major said the airline did not provide full-year FY27 capacity guidance, while elevated costs continue to remain an overhang.

Goldman Sachs highlighted that the broader Indian aviation sector, barring IndiGo, continues to face weak profitability and balance sheet stress.

The brokerage has retained its valuation at 10x FY28 estimated EV/EBITDAR.Jefferies maintained its Buy rating but lowered its target price to Rs 5,380 (22% upside) from Rs 5,500.

The brokerage said the airline delivered a weak but largely in-line performance in the fourth quarter and expects the near-term outlook to remain challenging amid elevated cost pressures.

For the first quarter, IndiGo has guided for mid-teen growth in unit revenue, largely driven by higher pricing, with demand so far remaining resilient enough to absorb part of the cost increases.

Jefferies believes operating conditions will remain difficult in the near term, though the environment is likely to be even more challenging for peers.Motilal Oswal maintained its Buy rating on IndiGo with a target price of Rs 5,600, implying an upside potential of 27%.

The brokerage said that despite near-term challenges from Middle East airspace disruptions, elevated fuel prices, rupee depreciation and higher damp-lease exposure, it remains positive on the airline's long-term growth strategy.It believes IndiGo is well positioned to benefit from India's strong domestic aviation demand and steadily expanding international network.

Looking ahead, Motilal Oswal expects a gradual normalisation of international operations, a reduction in Pratt & Whitney-related aircraft groundings, ongoing fleet additions, and the deployment of A321XLR aircraft on international routes to support an earnings recovery.JM Financial maintained its Add rating with a target price of Rs 5,000, noting that capacity growth remained subdued due to the Middle East conflict.

IndiGo reported ASK growth of 3.4% year-on-year to 43.6 billion in Q4FY26 and has guided for 3-4% ASK growth in Q1FY27, with most of the increase expected to come from domestic metro and leisure routes.The brokerage expects this, coupled with mid-teen PRASK growth on a favourable base, to support a recovery in unit economics.

Capacity was significantly impacted by the West Asia conflict, with around 18% of total capacity affected and more than 160 daily international flights disrupted in March 2026.

However, the airline indicated that capacity recovered to around two-thirds of normal levels in May and expects full normalisation by the end of June.

JM Financial also highlighted that the number of grounded aircraft remains in the 40s but is likely to decline to the 30s by year-end, which could provide a meaningful boost to both capacity and costs.Elara Capital maintained its Buy rating and target price of Rs 6,020, arguing that the stock's roughly 25% decline over the past six months due to flight disruptions, the Middle East conflict, higher crude oil prices and rupee weakness has created an attractive opportunity.

The brokerage believes the market is overly focused on near-term challenges while overlooking the benefits of a prolonged industry-wide capacity shortage.It highlighted that domestic advance fares are up around 17% year-on-year, while international advance fares have risen nearly 40%.

Elara also noted that IndiGo reported an adjusted profit of Rs 25 billion in Q4FY26 despite a non-cash foreign exchange loss of Rs 48 billion.

Additionally, competitor capacity reductions have been deeper than IndiGo's, supporting the airline's market share gains and pricing power.

While the brokerage has lowered its FY27 EBITDA estimate by 7% to account for higher crude oil and rupee assumptions, its FY28 estimates remain broadly unchanged.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own.

These do not represent the views of The Economic Times) ...