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Airlines

IndiGo's Shares Soar 40% as Valuation Gap Widens with Rivals

Strategic Insights

— 1 min read

The shares of InterGlobe Aviation Ltd, which operates IndiGo Airlines, have skyrocketed 40% since its debut fortnight back, sparking concerns among investors. The price shot up to Rs 1,087.50 per share on Tuesday from Rs 765 on debut on November 10, taking the valuation to Rs 39,188.77 crore. This has further widened the valuation gap between IndiGo and its listed rival airlines, SpiceJet and Jet Airways, whose market capitalizations are a tenth of IndiGo's at Rs 3,735 crore and Rs 5,206 crore, respectively.

Key Takeaways:

  • IndiGo's shares have risen 40% since its debut fortnight back, with the price increasing from Rs 765 to Rs 1,087.50 per share.
  • The valuation gap between IndiGo and its listed rivals, SpiceJet and Jet Airways, has widened, with IndiGo's valuation now at Rs 39,188.77 crore.
  • Aviation analysts believe that IndiGo's operational performance is superior to its domestic counterparts, but not comparable to international airlines like Ryanair and Southwest Airlines.
  • IndiGo's cost per available seat kilometre (CASK) is the lowest in the Indian market at 5.95 cents, followed by GoAir, SpiceJet, Jet, and Air India.
  • The airline has a low maintenance reserve cost of 2.51 cents, and its CASK excluding fuel cost is only slightly higher than the average CASK excluding fuel cost of low-cost airlines in Asia.
  • IndiGo's pending delivery of 430 Airbus A320neo aircraft and its 15 percentage points lead over its closest rival Jet Airways have buoyed investor sentiment.

Statistics:

  • 40% rise in IndiGo's shares since debut fortnight back.
  • Hefty valuation gap between IndiGo and its listed rival airlines, SpiceJet and Jet Airways: Rs 39,188.77 crore vs. Rs 3,735 crore and Rs 5,206 crore respectively.
  • IndiGo's cost per available seat kilometre (CASK) is 5.95 cents (lowest in the Indian market).
  • Average CASK excluding fuel cost of low-cost airlines in Asia: 2.81 cents.
  • Average CASK excluding fuel cost of low-cost airlines in EMEA and Americas: 3.60 cents and 4.78 cents respectively.

Sources:

  • "Rahul Bhatia-owned IndiGo spoils investors' party with sharp gains" - IndiaTimes.
  • "IndiGo's shares soar 40% after listing; widens valuation gap with rivals" - Business Standard.
  • "IndiGo's CASK is lowest in the Indian market" - SAP report, published in December last year.
  • "IndiGo's cost per available seat kilometre (CASK) is 5.95 cents" - SAP report, published in December last year.

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