Brokerage firm Elara Capital has upgraded its rating on IndiGo parent, InterGlobe Aviation, raising it to a 'buy' from the earlier 'sell' call. The brokerage cited expectations of strong demand growth through , driven by capacity expansion at major airports, launches of new airports, and the return of the P&W aircraft to IndiGo's fleet as key factors behind its upgrade.

Buoyed by the positive views rolled out by Elara Capital, shares of InterGlobe Aviation rose over 2 percent in trade on December 23. At 11.28 am, shares of the low-cost carrier were trading at Rs 4,4 74.25 on the NSE.

Apart from the rating upgrade, Elara Capital also sharply lifted its target price for InterGlobe Aviation by a whopping 38 percent, taking it to Rs 5,309. That translates into an upside potential of around 21 percent from Friday's close. Building on the expectations of improved demand in the near future, Elara also raised its  earnings-per-share estimates by 2-27 percent.

Meanwhile, the brokerage believes the addition of new airports and terminal upgrades should support a 12 percent demand compound annual growth rate (CAGR) over . In addition, the return of the P&W aircraft to IndiGo's fleet is likely to give an edge to the company until Q4, especially since its competitors are struggling to expand their respective capacities, the brokerage noted.

Analysts at Elara Capital expect Indian carriers to maintain their growth in international traffic while also benefiting from a shift in long-haul railway AC traffic, which is projected to double aviation traffic.

Published On -December 23, 2024 / 11:49 IST

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