Broker’s Call: Interglobe Aviation (Buy)

Target: INR 2,434

CMP: INR 2438.35

InterGlobe Aviation (IndiGo) fleet management has been the absolute cornerstone in building a successful and cost effective aviation operation. This has been reinforced by IndiGo’s recent order of 500 aircraft of the Airbus A320 family placed in June 2023. This order is not only IndiGo’s largest order, but also the largest single aircraft purchase ever by any airline with Airbus.

This order will be delivered between 2030 and 2035. The engine selection for this order will be in due course and therefore will be the exact mix of the A320 and A321. Previous orders totaled 480 aircraft, which are scheduled to be delivered by 2030. With this additional firm order of 500 aircraft for 2030-2035, IndiGo’s order book now has nearly 1,000 aircraft yet to be delivered in the next decade. The fuel efficient A320NEO family aircraft will allow IndiGo to maintain its strong focus on reducing operating costs and delivering fuel efficiency with high standards of reliability.

The order is well in advance to ensure a continuous increase in capacity along with associated cash flow benefits; Maintaining operations on the single-aisle fleet despite a strategy of increasing the international mix to 30 percent over the next two years and 40 percent by this decade from 23 percent in fiscal ’23 would bode well for the airline.