IndiGo stock strengthens as Jefferies maintains ‘buy,’ projects 8% growth

Shares of InterGlobe Aviation, which operates India's largest airline, IndiGo, have seen a steady rise, with stock prices increasing by nearly 1% to ₹4,850 on 5th September. This follows international brokerage Jefferies’ decision to maintain its 'buy' recommendation on the airline’s shares and raise the target price, projecting an 8.5% upside. 

Jefferies set a new target of ₹5,225, citing multiple growth drivers that could further boost IndiGo’s performance. For those considering investments, this could be an ideal time to buy shares online and take advantage of the expected uptrend.

Growth prospects supported by market dynamics

Jefferies attributes IndiGo’s continued growth to favourable market conditions, including the balance between aircraft supply and demand. The airline's cost-efficient operational model, especially in the context of competitors scaling back or ceasing operations, gives IndiGo a competitive edge. 

The brokerage also mentioned that a sustained decline in crude oil prices could further boost the airline’s profit margins. Despite these positive indicators, Jefferies does note some concerns, including the risk of a slowdown in global travel and rising operational costs unrelated to fuel.

Industry challenges fail to dampen analyst sentiment

IndiGo's position as a low-cost carrier in a consolidating aviation market has made it an attractive investment. Recently, in August, Rakesh Gangwal’s family trust sold a 5.24% stake in the company for ₹9,549 crore, yet market sentiment remained largely positive. 

Analysts, including Chokkalingam G, founder of Equinomics Research, continue to recommend a 'buy' for IndiGo shares. Chokkalingam highlighted that the promoter's stake sale isn’t new and hasn’t deterred the market before. He also emphasized that with peers like GoFirst and Jet Airways no longer operational and SpiceJet significantly reducing its fleet, IndiGo is well-positioned for further growth.

IndiGo's stock performance in recent times

At around 9:20 am on 5th September, IndiGo shares were trading at ₹4,837, marking a 0.5% increase from the previous closing price. The stock has seen an impressive rally of 12% over the last month. This performance comes as IndiGo continues to dominate the Indian aviation market, both in terms of market share and operational efficiency. 

Investors eyeing this stock could benefit from the current momentum, with an opportunity to buy shares online while taking advantage of the projected upside.

Key takeaway

IndiGo’s stock performance reflects the company’s strong market position, buoyed by favourable industry dynamics and operational excellence. While Jefferies’ positive outlook is a key indicator of potential growth, investors should also consider broader market risks, such as global travel slowdowns and rising non-fuel costs. 

With the stock already showing strong gains and analysts remaining bullish, IndiGo’s upward trajectory could offer significant returns for investors in the coming months.