IndiGo shares gain for 5th consecutive session as B&K Securities initiates with buy call; sees 30% upside- Grow Mudra

IndiGo shares gain for 5th consecutive session as B&K Securities initiates with buy call; sees 30% upside

26 Jun , 2025 By : Debdeep Gupta

Shares of Interglobe Aviation, the operator of Indigo Airlines, rose 1 percent to Rs 5,692, extending gains for a fifth straight session on Thursday, June 26, after B&K Securities initiated coverage with a buy rating, citing India's robust, underpenetrated air travel market.

With a target price of Rs 7,256 per share, the brokerage implies an upside potential of nearly 30 percent from the last closing price of Rs 5,639 per share. B&K Securities expects sustained demand-supply imbalance due to ongoing aircraft supply constraints, which should support fares and profitability.

IndiGo’s consumer-centric approach and strong cost leadership are seen as key strengths. B&K is building in an EBITDA and PAT CAGR of 20 percent and 22 percent, respectively, over FY25–27, and notes that the stock is currently trading at 20 times its FY27 estimated earnings.

It added that IndiGo’s strong on-time performance and one of the lowest complaint rates per customer reinforce its operational efficiency. Its cost advantages, which are difficult to replicate, position the airline among the global top five in terms of the lowest Cost per Available Seat Kilometer (CASK). This cost leadership allows IndiGo to consistently maintain healthy spreads and undercut competitors without compromising profitability.

India’s air passenger market is set to grow in double digits, driven by strong GDP growth and supportive policy measures. While air travel is typically tied to a country's economic performance due to its discretionary nature, India has outpaced global trends, with passenger growth averaging 2.8 times GDP growth—well above the global average of 2.1x.

This outperformance has been aided not just by economic expansion but also by structural reforms. Since 2014, the number of operational airports in the country has more than doubled to 162, over 600 routes have been launched under the Regional Connectivity Scheme (RCS-UDAN), and average real airfares have declined by around 25 percent between 2011 and 2023. As a result, India’s passenger air traffic has grown at a 9 percent CAGR from 2006 to 2025.

IndiGo shares have been on a decent run, rallying 24 percent since the beginning of the year.