IndiGo shares up 10% in 2 days: Should you buy?
What's the story
InterGlobe Aviation, the parent company of IndiGo, has witnessed a significant surge in its share price. The stock jumped nearly 5% today to ₹4,905 and whopping 9.8% over the last two sessions. However, it is still 20.7% away from its 52-week high of ₹6,232.5 apiece. The surge comes as Brent crude oil prices have fallen below $84 per barrel, after US and Iran announced a peace deal to end their conflict and reopen shipping routes through the Strait of Hormuz.
Analyst outlook
Jefferies reaffirms 'buy' call on IndiGo
Brokerage firm Jefferies has kept its "buy" call on the IndiGo stock with a target price of ₹5,380 per share. This represents an upside potential of 14.2% from its previous close of ₹4,709.7 per share. The firm noted that IndiGo's near-term focus is on pricing discipline rather than aggressive capacity addition and has managed cost inflation through a pragmatic growth approach.
Growth drivers
International business remains a key growth driver for IndiGo
Jefferies highlighted that IndiGo's international business remains a key growth driver through fleet and route expansion. The firm also noted that the airline is increasing its forex hedging coverage. Despite some challenges, such as forex losses and elevated costs, IndiGo's revenue for Q4 FY26 was slightly higher than the previous year's at ₹22,438.4 crore.
Fuel strategy
ATF price stabilization scheme to benefit airlines
Analysts estimate that every $5 increase in Brent prices has a 13% impact on IndiGo's earnings. The latest aviation turbine fuel (ATF) price was ₹105 per liter in Delhi. IndiGo and other airlines were to decide on the new ATF price stabilization scheme, which would have meant paying a fixed ATF price of ₹86.3 per liter for domestic operations and ₹104.5 per liter for international operations.