IndiGo shares rise 2% after Q2 results; brokerages eye upside on passenger yields, pricing power

IndiGo shares were trading at Rs 4,755, up 1.7 percent, in early deals. At this price, Nomura's revised target of Rs 6,200 implies an upside of around 30 percent, while Jefferies' target of Rs 5,650 and HSBC's target of Rs 5,545 suggest potential gains of approximately 19 percent and 17 percent, respectively. The stock has declined 7.1 percent so far in 2026, outperforming the Nifty 50, which has fallen 12.2 percent during the period.

IndiGo's market capitalisation stood at Rs 1.83 lakh crore. The gains came even as the broader market was largely flat. At 9:19 am, the Sensex was down 7 points at 74,144, while the Nifty was flat at 22,935. Jefferies maintained its 'buy' rating on IndiGo with a target price of Rs 5,650, describing the July-September quarter performance as soft but broadly in line with expectations. The brokerage said a 34 percent year-on-year increase in passenger yields helped partially offset higher fuel and other operating costs.

It added that pricing remained a priority for the airline, with management guiding for low-single-digit capacity growth and more than 25 percent growth in passenger revenue per available seat kilometre (PRASK) in the December quarter. While management commentary eased concerns about yields and non-fuel costs, Jefferies cautioned that earnings remained sensitive to fuel prices. It cut its FY27 earnings-per-share estimate by 9 percent and FY28-FY29 estimates by 2 percent.

Nomura maintained its 'buy' rating and raised its target price to Rs 6,200, the highest among the three brokerages. The brokerage said IndiGo's second-quarter performance demonstrated strong pricing power amid robust demand and cost inflation. EBITDA exceeded consensus estimates, supported by stronger-than-expected PRASK and passenger yields. Nomura expects margins to improve sequentially in the December quarter despite higher fuel prices.

It estimates that the airline's pricing actions could recover 80-90 percent of cost increases. The brokerage raised its FY27 and FY28 EBITDA estimates by 11 percent and 3 percent, respectively. HSBC also retained its 'buy' rating, with a target price of Rs 5,545. The brokerage said IndiGo's second-quarter EBITDA exceeded Visible Alpha consensus estimates by 25 percent, driven by stronger yields and lower fuel costs relative to expectations.

HSBC highlighted management's guidance for PRASK growth of more than 25 percent in both the December quarter and FY27, alongside low-single-digit capacity growth. However, non-fuel unit costs are expected to increase by high-single-digit to low-double-digit percentages. The brokerage also highlighted IndiGo's focus on ancillary and cargo revenue as additional growth opportunities. IndiGo on Thursday reported a consolidated net loss of Rs 1,879 crore for the September quarter, narrowing 27 percent from Rs 2,582 crore a year earlier.

Revenue from operations jumped 26 percent to Rs 23,364 crore. Passenger yields surged 34.3 percent year-on-year, helping offset some of the impact of elevated fuel costs. However, fuel cost per available seat kilometre increased 68.9 percent, while passenger traffic declined 4.7 percent. The airline's net loss excluding foreign exchange effects stood at Rs 724 crore, compared with a profit of Rs 104 crore a year earlier, highlighting continued pressure on underlying profitability.