InterGlobe Aviation：买入：健康策略将赢得桂冠-20250609

Investment Rating - The report maintains a "Buy" rating for InterGlobe Aviation, with a target price raised to INR 6,650 from INR 5,975, indicating an upside potential of 21.3% from the current share price of INR 5,482 [6][19][68]. Core Insights - InterGlobe Aviation's strategy focuses on expanding its domestic network, particularly in tier 2 and tier 3 routes, which allows the company to reduce reliance on competitive lower-yielding routes and enhances its capacity deployment [2][28]. - The company is experiencing a near full recovery in demand following a temporary drop due to geopolitical tensions, with expectations for strong trading supported by tight capacity [3][24]. - The international expansion strategy is deemed sensible, with potential for significant profit accretion in the medium to long term, despite short-term execution challenges [4][28]. Summary by Sections Network Strategy - Indigo's domestic network is highly fragmented, with the top 15 routes accounting for only 20% of its capacity, indicating low reliance on competitive metro routes [2][32][33]. - The company holds a significant market share, with over 60% capacity share on routes where it has deployed 66% of its domestic capacity, up from 53% in 2022 [2][27]. Financial Performance - The report adjusts forecasts following FY25 results, with FY26-27 EBITDA increasing by approximately 2% and net profit forecasts rising by 19% and 18%, respectively [6][66]. - Revenue projections for FY26 are set at INR 917,392 million, with a net profit forecast of INR 92,745 million [15][66]. Cost Management - Despite rising costs, the company expects to maintain flat ex-fuel unit costs, supported by improvements in its Aircraft on Ground (AOG) situation and low double-digit capacity growth during FY26 [5][61]. - The report anticipates a 1% year-on-year decline in ex-fuel unit costs for FY26, reflecting easing cost pressures [65]. International Expansion - Indigo's international operations are expected to grow significantly, with plans to increase international capacity contribution to nearly 40% of total capacity by FY30 [26][28]. - The company has signed agreements with major international airlines to enhance brand recognition and expand its international footprint [46][47]. Market Outlook - The Indian air travel market is projected to grow at a low double-digit rate, with Indigo expected to outperform the industry average due to its market leadership [25][54]. - The supportive macro environment and government initiatives to develop international hubs in India are likely to benefit the airline industry [54].