With headwinds of West Asia conflict now behind and international oil prices, including jet fuel prices, having come down significantly, investors have turned bullish on InterGlobe Aviation Ltd with shares of IndiGo, rising about 22% in the past one month, one of the highest among Nifty50 and Sensex constituents.
The stock advanced 5% on Thursday to close at Rs 5,462 apiece. Analysts feel that IndiGo’s strong operational metrics and dominant market share augur well for them to benefit from easing oil prices, stability in the rupee and a revival in travel demand.
“The signing of the peace deal between USA and Iran after a more than 3 month conflict will lead to correction in crude oil prices which also ease jet fuel (ATF) prices as well as supply fears. The rupee too is expected to appreciate vs the USD leading to beneficial impact for Interglobe on its aircraft lease payments. The opening of the airspace over Iran will also enable the company to relaunch its flights on the suspended routes to Central Asia and Europe,” said Sunny Agrawal, Head - Fundamental Research at SBI Securities.
The brokerage has a buy call on IndiGo with a target price of Rs 5,845. While international ATF prices have declined nearly 25% in one month and around 40-45% from the peak level in April, the rupee continues to trade below the 95 level against the dollar.
Agrawal added that the aviation industry in India is on a high growth path with the addition of newer airports, better infrastructure at terminals, improving the ease of air travel, people migrating from long-distance train travel to flights, as well as a rise in international air travel. Indigo’s market share has risen from 55% in Mar 2022 to 64% currently, led by multiple factors such as disruption in the operations of other carriers due to the grounding of aircraft, delay in deliveries of new aircraft, financial troubles, pilot and cabin crew shortage, as well as airspace closures.
“Its low-cost operating model has allowed the airline to withstand multiple headwinds such as volatility in ATF prices and the currency, weather and geopolitical-related disruptions to flight schedules and grounding of several aircraft due to engine-related issues,” stated Agrawal.
IndiGo, along with other airlines, faced severe challenges in recent times due to the weakening of the rupee, a 2.5x jump in international ATF prices when tensions escalated in West Asia and frequent airspace closures in the region. Despite reporting net loss of Rs 2,536 crore for the quarter ended March 31, 2026 (Q4FY26), the airline maintained that demand for air travel remained strong.
“IndiGo's FY26 result has underlined that demand remains strong, despite a host of challenges spanning internal/external disruptions and cost escalations throughout the year. The same has also been evident in the Q1FY27 yield outlook, based on trends in Apr/May 26. A moderation in crude prices against this backdrop has led to an expansion in our spread estimates, leading to a 26%/16% upgrade in our FY27/28E PBT,” said analysts at ICICI Securities.
They added, “The broad thesis again remains the same structural supply deficit, which allows IndiGo to register healthy yields from time to time. We have been cautious on spreads in the past (link), but the overall yield trajectory exhibits a positive surprise, apart from the moderation in crude prices.” The brokerage has a buy call on IndiGo with a target price set at Rs 6,020.
ICICI Sec stated that even beyond FY28, the guidance of a 15% CAGR in capacity over FY26-30, along with an increase in the international mix to 40% from 32% in FY26, lends a strong growth roadmap which could boost investor confidence beyond FY28. “While success in long-haul, XLR and stretch operations has to be sustainably proven, the strong fundamentals of the Indian market, robust scaled operations and balance sheet, along with a complete suite of business offerings in terms of fleet, cargo and personnel, put IndiGo in a vantage position,” said the brokerage.