21 Aug , 2025 By : Debdeep Gupta
Shares of InterGlobe Aviation, the operator of IndiGo, fell 2 percent to Rs 6,010 apiece on August 21 after Kotak Institutional Equities downgraded the stock to “add”, even as it maintained a target price of Rs 6,850, implying an upside potential of 14 percent from current levels.
Kotak noted that recent data indicates the impact of IndiGo’s capacity cuts, which seem to be occurring at a slightly faster pace than its key competitor. However, the brokerage clarified, “We would not take this as a sign of weakening demand.”
According to Kotak, the airline is phasing out damp leases and possibly deferring new aircraft deliveries during what is traditionally a loss-making quarter. Unlike its earlier approach of adding capacity in Q2 ahead of strong Q3 and Q4 demand, IndiGo is now focusing on measures to support yield growth during the festive season.
Kotak further highlighted that airlines aim to avoid setting low yields as the new norm, particularly when most carriers are operating at a loss. Despite falling crude prices, yields have remained flat for the past three years, which Kotak described as a “commendable feat.” The brokerage expects carriers to push for year-on-year yield growth in the upcoming festive season.
As part of its capacity adjustments, IndiGo has reduced its average monthly flight count to around 2,000 for the current months, representing a decline of 11 percent compared to Q4FY25 and 9 percent compared to Q1FY26. By comparison, Air India has reduced its flights by 10 percent and 8 percent, respectively.
For the June quarter, IndiGo reported a net profit of Rs 2,176 crore, down 20.2 percent from Rs 2,728 crore in the corresponding period last year. Revenue rose 4.7 percent year-on-year to Rs 20,496 crore, but missed the estimated Rs 21,150 crore.
EBITDA increased marginally by 1 percent year-on-year to Rs 5,226 crore, while the operating margin slipped to 25.5 percent from 26.4 percent a year earlier.
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