Last Update 08 Dec 25
Fair value Increased 31%INDIGO: Future Index Inclusion And Fleet Expansion Are Expected To Drive Upside
Analysts have raised their price target for InterGlobe Aviation from ₹4,913 to approximately ₹6,442 per share, reflecting stronger expectations for long term revenue growth, slightly higher profit margins, and a modestly richer future earnings multiple despite a higher assumed discount rate.
What's in the News
- Board meeting scheduled for November 21, 2025, to approve an investment of USD 820 million in wholly owned subsidiary InterGlobe Aviation Financial Services IFSC Private Limited, in one or more tranches (company filing)
- Special shareholders meeting on December 06, 2025, via postal ballot to consider the appointment of Amitabh Kant as a Non Executive Non Independent Director (company notice)
- Board meeting on November 04, 2025, to review and approve unaudited standalone and consolidated financial results for the quarter and half year ended September 30, 2025 (company filing)
- IndiGo converts 30 of its 70 purchase rights for Airbus A350 900 aircraft into firm orders, doubling its A350 900 wide body order from 30 to 60 jets and expanding long haul growth options, powered by Rolls Royce Trent XWB engines (company announcement)
- InterGlobe Aviation added to the Nifty 50 index, marking its inclusion among India’s benchmark large cap stocks (index announcement)
Valuation Changes
- Consensus Analyst Price Target has risen significantly from ₹4,913 to about ₹6,442 per share, implying a materially higher assessed fair value for InterGlobe Aviation.
- Discount Rate has increased moderately from 14.37 percent to about 15.68 percent, reflecting a somewhat higher required return or perceived risk.
- Revenue Growth has edged up slightly from around 13.05 percent to about 13.43 percent, indicating marginally stronger long term top line expectations.
- Net Profit Margin has improved modestly from roughly 10.33 percent to about 10.59 percent, pointing to a small uplift in anticipated profitability.
- Future P/E has risen slightly from about 29.0x to roughly 30.0x, suggesting a modestly richer valuation multiple on expected earnings.
Key Takeaways
- Launching Business Class and BluChip loyalty program aims to boost revenues, customer retention, and operational insights, enhancing IndiGo's financial performance.
- International market expansion and digital investment in booking platforms intend to diversify revenue and improve margins through increased direct bookings and reduced costs.
- Rising costs, competitive pressures, and operational challenges threaten IndiGo's profitability and efficiency, necessitating strategic adjustments to sustain growth and manage margins.
Catalysts
About InterGlobe Aviation- Engages in the operation of IndiGo airline in India and internationally.
- IndiGo's launch of a new Business Class on key metro routes could tap into a higher-yield passenger segment, potentially increasing revenues and improving net margins.
- The introduction of the BluChip loyalty program is expected to drive customer retention and spend, leading to increased passenger revenues and enhanced insights for operational efficiency.
- Reduction in grounded aircraft and associated expensive mitigation costs will likely improve net margins, as the company expects groundings to decrease to sub-60 levels by the end of the calendar year and further into the next financial year.
- Expansion into international markets, with new destinations and increased international capacity share goals, is poised to boost overall revenue growth by tapping under-served markets and diversifying revenue streams.
- Investments in digital transformation, such as revamped website and app, could increase direct bookings, lower distribution costs, and improve net margins by capturing a larger share of ancillary revenues.
InterGlobe Aviation Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming InterGlobe Aviation's revenue will grow by 13.1% annually over the next 3 years.
- Analysts assume that profit margins will increase from 9.0% today to 10.3% in 3 years time.
- Analysts expect earnings to reach ₹110.2 billion (and earnings per share of ₹253.75) by about January 2028, up from ₹66.4 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting ₹133.7 billion in earnings, and the most bearish expecting ₹83.2 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 29.0x on those 2028 earnings, up from 26.8x today. This future PE is greater than the current PE for the IN Airlines industry at 11.6x.
- Analysts expect the number of shares outstanding to grow by 3.97% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 14.37%, as per the Simply Wall St company report.
InterGlobe Aviation Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- IndiGo reported a net loss of ₹10 billion due to increased fuel costs and aircraft groundings, which adversely impacted net margins.
- The rising competitive intensity in international markets could pressure revenue growth as IndiGo expands its international capacity.
- Inflationary pressures and rising VAT on aviation fuel could further erode net profit margins, affecting overall earnings if these costs are not offset by increased revenues.
- IndiGo's operational challenges from infrastructure limitations at major hubs like Delhi and Mumbai could affect capacity expansion and operational efficiency, potentially impacting revenue and profitability.
- System outages and weather-related disruptions have posed operational challenges, potentially affecting IndiGo's ability to sustain consistent revenue streams and maintain low costs.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of ₹4913.25 for InterGlobe Aviation based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹5500.0, and the most bearish reporting a price target of just ₹4050.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹1066.7 billion, earnings will come to ₹110.2 billion, and it would be trading on a PE ratio of 29.0x, assuming you use a discount rate of 14.4%.
- Given the current share price of ₹4595.7, the analyst's price target of ₹4913.25 is 6.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.