Shares of InterGlobe Aviation, the parent company of IndiGo, were trading with gains on Tuesday, September 29, as Goldman Sachs reiterated its Buy rating on the airline with a target price of ₹5,900. According to reports from CNBC TV18 and LiveMint, the target price implies an upside of around 21% from Monday's closing price of ₹4,874.50. Goldman Sachs said it remains positive on IndiGo's growth outlook, citing the airline's consistent market share gains, favourable industry capacity dynamics, cost leadership and the long-term growth potential of its international business. The brokerage's analysis is based on FY28 EV/EBITDAR valuation, reflecting a conservative approach that depends on earnings forecasts rather than market re-rating.
The brokerage noted that IndiGo's market share has increased from around 50% in the financial year 2020 to around 65% in August 2026. As reported by CNBC TV18 and LiveMint, Goldman Sachs expects these gains to remain sustainable, citing liquidity challenges faced by the No. 2 player. The second-largest operator Air India currently holds 26.7% market share, with IndiGo's dominant position providing significant competitive advantages. The brokerage also expects modest industry fleet additions over the medium term, which it believes should support yields. At the same time, IndiGo's cost leadership is expected to drive an improvement in profitability, though Goldman Sachs explicitly notes that fuel costs remain a near-term headwind that will need to ease before significant profitability improvements materialize.
According to Business Standard, fuel costs are high and will remain high and volatile until the Iran war sees a resolution. In Q1FY27, fuel cost per available seat kilometre (ASK) rose 81% year-on-year and 63% quarter-on-quarter to ₹2.49. Fuel expenses amounted to 44.1% of revenue, compared to 30% in FY26 and 32.4% in FY25. The management is prepared to offset higher costs through pricing and fuel surcharges, but margin recovery may depend on supply normalisation. If IndiGo maintains pricing and there is a reduction of fuel prices to below 35% of revenues, there would be substantial margin expansion. The management believes recent price hikes may be structural, rather than cyclical, as a post-Covid price expansion in FY22 and FY23 was sustained through FY24–FY25.
According to Business Standard, IndiGo is targeting 40% international capacity by 2030, with India being an under-penetrated outbound market having passport penetration of around 9%. The airline has signed an agreement with CFM International to procure 1,000 LEAP 1A engines for its fleet of 510 Airbus A320neo aircraft, alongside long-term MRO support. This strategic shift from leasing to owning is more nuanced, with increasing ownership from 22% currently to 40% by FY30 via its GIFT City leasing platform. The Bengaluru MRO facility being in-house will reduce costs and improve resilience. IndiGo generates high free cash flow, with ₹42,400 crore (net of lease repayments) over the last five years. Raising fleet ownership, rejigging treasury operations to increase hedge coverage from 15% to 33%, and localising MRO operations would reduce exposure to forex volatility.
The stock closed at ₹4,874 against a 52-week range of ₹3,895 to ₹5,970, with the airline having a market capitalisation of about ₹1.88 lakh crore. According to LiveMint, IndiGo shares rose as much as 0.6% during Tuesday's session to hit an intraday high of ₹4,895.90 on the BSE. However, the stock has remained under pressure over recent periods, declining 3% in one week, 6% in one month and 8.5% over three months. Over a six-month period, the stock has gained 18.5%, while on a one-year basis, it has declined 15%. The broader analyst consensus remains positive, with Bloomberg analyst data showing 21 of 26 analysts have a 'buy' rating, while three have a 'hold' and two have a 'sell' recommendation. Despite high fuel costs remaining a drag on profits, the investment narrative appears compelling given the airline's strategic positioning and operational improvements.
