Brokerages cut IndiGo’s earnings estimates on Q2 loss and weak guidance

Brokerages have cut earnings estimates of InterGlobe Aviation, which runs the country’s largest airline IndiGo, on July-September quarter (Q2) loss and weak guidance.

InterGlobe Aviation posted Rs 1,301 crore pre-tax loss in Q2FY20 due to mark-to-market foreign exchange loss and provisioning for aircraft maintenance. The stock fell nearly 12 per cent and closed at Rs 1,467.90 on Friday after the management guided for slower capacity expansion and cost increase in the coming months.

“We cut IndiGo’s FY20 and FY21 earnings before interest, taxes, depreciation, amortisation, and restructuring or rentals (Ebidtar) by 30.3 per cent and 22 per cent, respectively, and downgrade our rating from ‘buy’ to ‘hold’, given the increase in maintenance cost, cut in FY20 capacity addition guidance from 30 per cent to 25 per cent, weak domestic yield environment, and overhang of promoter feud,” said Prabhudas Lilladher analyst Paarth Gala in his investor note.