IndiGo’s Q1 Earnings Forecast: Anticipated Profit Decline Amid Operational Challenges
InterGlobe Aviation, the leading airline in India by market share, is set to report its quarterly earnings for the period ending June 30, 2024, with expectations of a significant year-on-year decline in net profit. Analysts forecast that the profit after tax (PAT) for the first quarter of FY24 could range between Rs 2,135 crore and Rs 2,430 crore, reflecting a challenging operating environment influenced by several factors.
The anticipated drop in net profit is primarily attributed to escalating fuel costs, a weak load factor experienced in May, and the recent crisis stemming from the roof collapse at Delhi’s Terminal 1. These operational hurdles have raised concerns among investors and analysts alike.
Brokerage firms have provided varying estimates, indicating mixed sequential profit growth and differing revenue projections. Kotak Institutional Equities predicts a substantial PAT growth of 28.3% on a sequential basis, while Elara Capital adopts a more conservative stance, estimating a modest uptick of 3.6%.
On the revenue front, Elara Capital anticipates that IndiGo will report revenues of approximately Rs 18,806 crore, representing a 12.7% increase year-on-year. In contrast, Kotak’s estimate stands at Rs 17,851 crore, reflecting a 7% rise compared to the same period last year.
IndiGo is scheduled to announce its quarterly earnings on Friday, July 26, and market participants are keenly awaiting the results to assess the airline’s performance in light of the current challenges.
According to Elara Capital, the recurring profit after tax is expected to decline by 28% year-on-year, landing at Rs 2,135 crore, while projecting a 3.6% increase on a quarter-on-quarter basis. The net sales figure is estimated to reach Rs 18,806 crore, indicating a 12.7% rise year-on-year and a 5.5% increase sequentially.
Furthermore, the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is projected at Rs 4,358 crore, which would represent a decrease of 10.3% year-on-year and a 4.8% decline quarter-on-quarter. Analyst reports suggest that the expected EBITDA decline is primarily driven by rising fuel and non-fuel costs, with airfare remaining relatively flat year-on-year.
Kotak Equities has also weighed in on the situation, projecting a 21.4% decline in IndiGo’s PAT on a quarter-on-quarter basis. The volatility in operational performance amid rising costs presents a challenging landscape for the airline as it navigates through this financial quarter.
As the airline industry continues to grapple with various external pressures, including fluctuating fuel prices and operational disruptions, all eyes will be on IndiGo’s forthcoming earnings report to gauge its resilience and strategic response to these ongoing challenges.
Market analysts are closely monitoring these developments, as they could have broader implications for the airline sector as a whole, particularly in the context of recovery post-pandemic and the competitive landscape in Indian aviation.
