With the shares of InterGlobe Aviation, parent company of the IndiGo airline, suffering a free fall after disappointing fourth-quarter results, various brokerages are reviewing the ratings and price target of the company.
After market hours on Wednesday, the company reported a 73.3% year-on-year drop in quarterly profit to 1.17 billion rupees (US$17.5 million). It had reported a profit of 4.4 billion rupees in the corresponding quarter last year. Passenger yields of the airline fell by more than 5% in the period.
Severe competitive pressure, higher fuel costs and an adverse forex position are cited as reasons for InterGlobe Aviation’s weak performance in the January-to-March quarter.
Shares of InterGlobe Aviation nosedived in early-morning trade on Thursday. On the Bombay Stock Exchange it made a weak opening and tumbled 17.57% to 1,111.30 rupees in early trade. On the National Stock Exchange shares of InterGlobe tanked 19.75% to 1,077.55 rupees, reports the Press Trust of India.
Investment bank Morgan Stanley has cut the target price of the stock to 1,205 rupees from 1,213 rupees, reports Economic Times. IDFC Securities has downgraded the stock to “neutral” and reduced the price target 12% to 1,293 rupees, the daily added.
The airline has been going through turbulent times. Last weekend InterGlobe announced that its president and whole-time director Aditya Ghosh would step down as of July 31.
Earlier it had to ground its Airbus A320neo fleet after the Indian Directorate General of Civil Aviation raised safety concerns.