IndiGo stock jumps 3.5%, tops Nifty gainers as crude oil prices slump 7.6%; stock rises for third straight day

Lower crude oil prices are particularly significant for airlines, given the substantial contribution of aviation turbine fuel (ATF) to their operating costs. Brent crude futures settled $8.66, or 7.63 percent, lower at $104.77 a barrel on Monday. Prices held relatively steady near $104.70 a barrel on Tuesday. The sharp decline in oil prices comes at a time when IndiGo has been grappling with elevated fuel costs, even as strong passenger yields and pricing power have helped the airline offset some of the pressure on profitability.

At Rs 5,092, IndiGo had a market capitalisation of approximately Rs 1.97 lakh crore. The stock was down 0.4 percent year-to-date. The latest gains also follow Monday's positive reaction to the Centre's notification of new airfare pricing regulations under Rule 192 of the Bharatiya Vayuyan Niyam, 2026. The regulations allow airlines to determine their own tariffs based on operating costs, while requiring them to submit fare details to the Directorate General of Civil Aviation (DGCA).

Airlines must disclose base fares, taxes, fees, cancellation charges, refund conditions and additional charges. The rules also empower the government to intervene in the public interest, although they do not explicitly define extraordinary circumstances or clarify the scope of potential airfare caps. The framework indicates that airlines retain pricing flexibility, subject to regulatory monitoring and greater disclosure requirements.

The latest rally follows IndiGo's Q2 FY27 earnings, after which Jefferies, Nomura and HSBC retained their 'buy' ratings, citing strong pricing power and improving passenger yields. Nomura maintained the most bullish target price among the three brokerages at Rs 6,200, highlighting the airline's ability to recover an estimated 80-90 percent of cost increases through pricing actions. It expects operating margins to improve sequentially in the December quarter.

Jefferies retained its 'buy' rating with a target price of Rs 5,650, noting that a 34 percent year-on-year increase in passenger yields helped partially offset higher fuel and other operating costs. However, it cautioned that earnings remained sensitive to fuel prices. HSBC maintained its 'buy' rating with a target price of Rs 5,545, highlighting stronger-than-expected passenger yields and the airline's focus on ancillary and cargo revenue.

IndiGo 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 rose 26 percent to Rs 23,364 crore.