Why IndiGo shares are flying low despite trebling profits

InterGlobe Aviation Ltd’s shares rose about 3% in early trading on Tuesday, after the company reported a 205% jump in pre-tax profit for the December quarter. InterGlobe runs IndiGo, India’s largest airline.

But the company’s shares have since given up most of those gains since, and were trading 1.8% lower at the time of writing.

That’s because the skies are looking a bit cloudy from a near-term perspective.

In a post earnings conference call, Ronojoy Dutta, chief executive officer, IndiGo, said, “As we move to the seasonally weak fourth quarter, we will find it difficult to produce year over year improvement in unit revenues because we will be comparing ourselves against a base period when Jet Airways capacity was beginning to decline.”