New Delhi, March 23: India’s largest airline, Indigo’s parent company InterGlobe Aviation, is facing potential profit challenges due to fluctuations in crude oil prices and disruptions in travel caused by tensions in the Middle East. This insight comes from analysts at Goldman Sachs.
The analysts have reduced InterGlobe Aviation’s target price by 13.33% to ₹5,200, down from the previous ₹6,000. However, Goldman Sachs has maintained a ‘Buy’ rating on the stock.
According to the analysts, the outlook for the airline’s income remains weak in the short term due to ongoing volatility in crude oil prices, with no profits expected in FY27. Nevertheless, the stock may continue to experience fluctuations.
Goldman Sachs has also lowered its estimates for Indigo’s international flight capacity for the June quarter, particularly on routes to the Middle East, factoring in the rising costs of jet fuel, which is the airline’s largest expense.
The escalation of conflict in Iran has repeatedly closed airspace in Gulf countries, significantly impacting air travel in the region. Additionally, supply-related risks and export restrictions have caused processed fuel prices to rise more rapidly than crude oil.
The brokerage firm has revised its operational income (EBITDAR) estimates for FY26 to ₹13,700 crore and for FY27 to ₹15,900 crore, down from previous estimates of ₹18,300 crore and ₹25,800 crore, respectively. Earnings per share estimates have also seen substantial cuts for both years.
The brokerage stated, “While investors will focus on income sensitivity in the near term, in the long run, the ability to control fixed costs and maintain balance sheet strength will be the key differentiator.”
At 1:28 PM, Indigo’s shares were trading at ₹3,910, down 5.75%. Over the past month, the stock has declined by approximately 20%.
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