{"id":290879,"date":"2019-09-07T06:36:04","date_gmt":"2019-09-07T06:36:04","guid":{"rendered":"http:\/\/infralive.com\/web\/?p=290879"},"modified":"2019-09-07T06:36:04","modified_gmt":"2019-09-07T06:36:04","slug":"icici-securities-maintain-buy-on-indigo-with-a-tp-of-rs-1914","status":"publish","type":"post","link":"https:\/\/infralive.com\/web\/icici-securities-maintain-buy-on-indigo-with-a-tp-of-rs-1914\/","title":{"rendered":"ICICI Securities: Maintain \u2018buy\u2019 on Indigo with a TP of Rs 1,914"},"content":{"rendered":"<p>We have factored Ind-AS 116 in our analysis of InterGlobe Aviation\u2019s (IndiGo) finances and thus, introduced an \u2018on balance sheet\u2019 liability as well as a Right to Use (RoU) asset along with allocation of erstwhile rentals to depreciation and interest expense in the P&amp;L. These capitalised operating leases (`161 bn as of Jun\u201918) will be marked-to-market and hence, will have a respective forex loss or gain. The MTM gain\/loss will be big for<br \/>\nIndiGo (~change of `1 in exchange rate will drive a forex impact of `2.3 bn based on Jun\u201918 liability) as it has a huge fleet on operating lease (206 airplanes as of Jun\u201918). However, this has no cashflow effect and will not impact normalised earnings. Maintain \u2018buy\u2019 with a target price of `1,914 based on 20x FY21E P\/E (unchanged).<\/p>\n<p>Sheer size of fleet on operating lease will result in big forex MTM for IndiGo. Significant size of fleet on operating lease results in a significant lease liability for IndiGo (~`161bn as of Jun\u201918). As such, the forex driven MTM change in liability will be big for IndiGo. Addition of fleet will continuously keep increasing the liability and also the MTM impact.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>We have factored Ind-AS 116 in our analysis of InterGlobe Aviation\u2019s (IndiGo) finances and thus, introduced an \u2018on balance sheet\u2019 liability as well as a Right to Use (RoU) asset along with allocation of erstwhile rentals to depreciation and interest expense in the P&amp;L. These capitalised operating leases (`161 bn as of Jun\u201918) will be marked-to-market and hence, will have a respective forex loss or gain. The MTM gain\/loss will be big for IndiGo (~change of `1 in exchange rate will drive a forex impact of `2.3 bn based on Jun\u201918 liability) as it has a huge fleet on operating [&hellip;]<\/p>\n","protected":false},"author":44,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[196,130,138],"tags":[],"class_list":["post-290879","post","type-post","status-publish","format-standard","hentry","category-civil-aviation-the-financial-express","category-newspapers","category-the-financial-express"],"acf":[],"_links":{"self":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/290879","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/comments?post=290879"}],"version-history":[{"count":0,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/290879\/revisions"}],"wp:attachment":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/media?parent=290879"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/categories?post=290879"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/tags?post=290879"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}