History:
InterGlobe Aviation Limited, doing business as IndiGo, is a low-cost airline. It is the largest airline in India by passengers carried and fleet size, with a 61.8% domestic market share as of November 2023. It is the largest individual Asian airline, and one of the largest in the world in terms of passengers carried, with more than 10.7 Cr passengers carried in 2024. As of February 2024, IndiGo operates over 2,000 daily flights to 121 destinations – 88 domestic and 33 international, with a fleet of over 367 aircraft. It has its primary hub at Indira Gandhi International Airport, Delhi. IndiGo was founded in 2006 as a private company by Rahul Bhatia of InterGlobe Enterprises and Rakesh Gangwal, a United States-based expatriate Indian. InterGlobe had a 51.12% stake in IndiGo and 47.88% was held by Gangwal's Virginia-based company, Caelum Investments. IndiGo placed a firm order for 100 Airbus A320-200 aircraft in June 2005 with plans to begin operations in mid-2006. By the end of 2006, the airline had six aircraft, and nine more were acquired in 2007. In December 2010, IndiGo replaced state-run carrier Air India as the third largest airline in India, behind Kingfisher Airlines and Jet Airways with a passenger market share of 17.3%. In 2011, IndiGo placed an order for 180 Airbus A320 aircraft in a deal worth US$15 billion. In January 2011, after completing five years of operations, the airline was permitted to launch international flights. In December 2011, the DGCA expressed reservations that the rapid expansion could impact passenger safety. In February 2012, IndiGo took delivery of its 50th aircraft, less than six years after it began operations. For the quarter ending March 2012, IndiGo was the most profitable airline in India and became the second largest airline in India in terms of passenger market share. On 17 August 2012, IndiGo became the largest airline in India in terms of market share surpassing Jet Airways, six years after commencing operations. In January 2013, IndiGo was the second-fastest-growing low-cost carrier in Asia behind Indonesian airline Lion Air. As of March 2014, IndiGo is the second-largest low-cost carrier in Asia in terms of seats flown. In August 2015, IndiGo placed an order for 250 Airbus A320neo aircraft worth $27 billion, making it the largest single order ever in Airbus history. IndiGo announced a ₹3,018 crore initial public offering on 19 October 2015. In October 2019, IndiGo placed an order for 300 Airbus A320neo aircraft worth ₹2.3 lakh crore , surpassing its own record of the largest single order ever in Airbus history. In December 2019, the airline became the first Indian airline to operate 1,500 daily flights. On 31 December 2019, it became India's first airline to have a fleet size of more than 250 aircraft. IndiGo has been ranked 3rd most punctual airline globally in 2021 by OAG Punctuality League. In January 2023, the airline became the first Indian airline to have a fleet size of more than 300 aircraft. In February 2023, the airline inducted the first wide-body aircraft, a Boeing 777-300ER to its fleet. In June 2023, the airline placed an order for 500 Airbus A320neo family aircraft, making it the largest aircraft order in commercial aviation history. As of 31st March 2024, fleet of 367 aircraft including 31 A320 CEOs, 192 A320 NEOs, 94 A321 NEOs, 45 ATRs, 3 A321 freighters and 2 B777 (damp lease); a net increase of 9 passenger aircraft during the quarter. IndiGo operated at a peak of 2,021 daily flights during the quarter including non-scheduled flights. During the quarter, it provided scheduled services to 88 domestic destinations and 30 international destinations.
Business in Numbers:
Just in fy_2010 Indigo with 27 Fleet size and below 1Cr Passengers their sales and profits were 2700 Cr and 479 Cr when majority of the players were doing losses. We saw them growing from there to During Fy_16 IPO Year their fleet size was 107 carrying 3.3 Cr passengers annually making the sales and Profits of 16600 Cr and 2000 Cr Respectively. They have strong growth, great market share and high consistent profits and we have been recommending this company from the Airlines sector. Till The Covid came we saw the strong growth of 7.5 Cr Passengers from 262 fleets giving sales of 36000 Cr and they registered their losses for the 1st time post IPO of around 2300 Cr. Post Covid as this was from touch intensive sector the passenger in overall airline industry have dropped significantly. Hence all the 3 years fy_2020, 21 & 22 were highly challenging. During Fy_21 Passengers dropped from 7.5 Cr to mere 3.1 Cr. Hence sales dropped by 50% and they made losses continuously in the row for 4 straight years. Last year again we saw lifetime high passengers 8.6 Cr which were even larger than pre_covid era, Lifetime high fleet size of 304, Lifetime high revenue of 54000 Cr. Loss narrowed from 6000 Cr to 300 Cr.
Fy_24:
Capacity increased by 21.8% to 13.4 Cr Passengers. Passengers increased by 24.7% to 10.7 Cr which was the lifetime high Passengers. Yield decreased by 1.0% to INR 5.08 and load factor improved by 3.8 pts to 85.9%. Revenue from Operations increased by 26.6% to INR 68904 Cr. Reduction in fuel CASK by 17.0% to INR 1.72. Profits skyrocketed due to improved margin with the lifetime high profits of 8172 Cr which were 4X of previous lifetime high profits we saw in fY_18. This takes EPS to 217 this year which indicates the share below its fairvaluations even after rallying 63% this year. Yes, share still trades at fair valuations. Further we may see Indigo with strong 25% sales growth taking Indigo towards the benchmark 2 Lakh Cr revenue till 2030.
Action:
As we have been recommending this company since its IPO. This was the year with profits after the long 4 years of losses. We have recommended it during the whole fall. New buying again can be done during any fall near 3380 while some 5% profits can be booked as it has approached at our estimated target of 4578. Overall multiyear rally could be expected.
The weightage of 1.5% can be given to this company. Considering India to become the world's fastest-growing industry, Airlines could get the benefit.
Disclosure: This document is not prepared for any recommendation; this is prepared for educational purposes.
