Why IndiGo Share Price is Falling

Travel is the only thing you buy that makes you richer.

The quote resonates strongly today as people increasingly prioritise travel experiences.

With rising incomes, easier access to destinations, and greater emphasis on quality of life, the travel industry in India has seen robust growth.

Airlines and hospitality businesses are experiencing surges in demand, driven by a society eager to explore, indulge in luxury, and seek convenience.

The industry's rise is also evident in the growing number of travel agencies providing comprehensive, curated experiences. Agencies cater to an expanding customer base seeking seamless travel solutions.

Among the notable players in the sector is InterGlobe Aviation, parent company of IndiGo.

As India's largest airline, IndiGo serves a wide domestic and international network, making air travel accessible to millions. The airline's commitment to affordability has made it the go-to choice for budget-conscious travelers, and it dominates the market with a substantial share in passenger volume.

However, IndiGo's recent quarterly performance has left investors concerned. The airline's stock slipped by 11.2% over the past five days following the announcement of its latest quarterly results.

Let's take a look at the results to understand why IndiGo's share price is falling after this recent update.

Disappointing Quarterly Results

IndiGo, dropped sharply after the company reported a loss of Rs 9.9 billion (bn) for Q2 FY25. This loss represents a major downturn from its Rs 1.9 bn profit in the same quarter last year, and an even steeper decline from Rs 27.3 bn in the preceding June quarter.

The loss has alarmed investors, as it significantly exceeded market expectations. IndiGo faced operational pressures from aircraft groundings, or aircraft on ground (AOG), which peaked during the quarter.

Both factors severely impacted profitability, with the company struggling to cover increased costs despite higher earnings from operations.

Revenue from operations rose by 14% year-on-year (YoY) to Rs 16.9 bn in the reporting quarter, indicating steady demand for air travel.

This second-quarter dip, a period that is generally slower for airlines, was further impacted by seasonal factors.

What Next?

Looking ahead, IndiGo is focused on strategic initiatives to strengthen its position both domestically and internationally. It has set a clear goal to become a leading carrier in India by 2030, while expanding its global reach.

With plans to roll out a tailored business class on 12 metro routes by the end of 2025, IndiGo aims to attract a broader customer base, including business travelers.

This shift aligns with its recent launch of the BluChip loyalty program, designed to enhance customer retention and build deeper insights into passenger preferences.

IndiGo is also focused on technological advancements, having revamped its website and mobile app for a smoother user experience. On the operational front, IndiGo has been addressing aircraft groundings, with grounding numbers beginning to reduce, which should improve operational performance in the upcoming quarters.

Additionally, it has received approval from the market regulator for IndiGo Ventures, a venture capital arm aimed at investing Rs 3 bn in aviation-related startups, which is expected to bring innovative solutions to the business.

Further growth is anticipated with IndiGo's continued international expansion. After adding routes to Jaffna and Mauritius, IndiGo plans to launch flights to Penang, Langkawi, and three other destinations by year-end, targeting an international capacity share of 30%.

Domestically, it is bolstering pilot training capacity through partnerships with aviation academies and the launch of new learning centers.

How IndiGo Share Price has Performed Recently

In the past five days IndiGo share price has slipped 11.2%. In the last month it has tumbled 16.1%.

The stock price has surged 34.9% in the 2024. Additionally, it has rallied 61% in the last year.

The stock touched its 52-week high of Rs 5,033.2 on 12 September 2024 and a 52-week low of Rs 2,415 on 1 November 2023.

About IndiGo

InterGlobe Aviation is the operating company for IndiGo, India's largest passenger airline in terms of domestic market share.

The airline operates on an LCC business model, offering no-frills air-commute to passengers in the domestic as well as international sectors. It commenced operations from August 2006 with a single aircraft.

Promoted by Rahul Bhatia and Rakesh Gangwal, the company was originally incorporated in January 2004 as a private limited company and converted into a public limited company in June 2006 as InterGlobe Aviation.

Subsequently, IndiGo proceeded with its IPO in 2016, wherein its shares were listed on the BSE and the NSE.

To know more, check out the Interglobe Aviation (Indigo) company fact sheet and quarterly results on our website.

You can also compare IndiGo with its peers.

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To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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