IndiGo to report June quarter result today; here's what analysts expect

Analysts at Centrum Broking estimate the airline to clock a net loss of Rs 2,672.6 crore driven by low traffic volume, low fleet utilisation and poor coverage of fixed costs

As InterGlobe Avition-owned IndiGo burns its pocket with lease and rental payments for over 260 aircraft fleet amid calibrated operations, thanks to suspended air travelling amid Covid-19 outbreak, analysts would watch out the budget carrier’s cash flows in the April-June quarter of FY21 (Q1FY21) and further fund-raising plans. The airline is scheduled to report its Q1FY21 earnings on Wednesday, July 29.

During the corresponding quarter of the previous fiscal (Q1FY20), the Gurugram-based airline logged a net profit of Rs 1,203 crore, which turned into a net loss of Rs 871 crore by Q4FY20 amid Covid-19 outbreak. Besides, the airline’s EBITDAR (earnings before interest, taxes, depreciation, amortisation and restructuring or rent costs) was Rs 2,778.5 crore in the previous year quarter. It, however, dropped to Rs 86.7 crore in Q4FY20.

During the quarter under review, the airline’s stock price underperformed at the bourses. It tanked 7.4 per cent during the three month period, as against a 18.4 per cent gain in the benchmark S&P BSE Sensex, ACE Equity data shows.

Here’s what leading brokerages expect:

Edelweiss Securities

Among the most optimistic estimates by analysts, the brokerage pegs India’s largest airline’s net loss at Rs 797 crore for the quarter under review, down 166.5 per cent, from net profit of Rs 1,200 crore logged in Q1FY20. Sequentially, it would be less than Rs 871 crore-loss incurred in Q4FY20.

Besides, it estimates the revenue at Rs 2,954.2 crore, down 69 per cent YoY, from Rs 9,420.1 crore clocked in Q1FY20, and 64.4 per cent QoQ from Rs 8,299.1 crore reported in Q4FY20.

“While the yield environment has deteriorated, a weak passenger load factor (PLF) of 55 per cent will lead to decrease in Revenue Per Available Seat Kilometer (RASK; down 37 per cent YoY). Capacity growth may plunge by 51 per cent YoY, while decline in fuel CASK (down 67 per cent YoY) will act as a tailwind, offsetting impact of lower yields,” the brokerage said in a results preview note.

Motilal Oswal Financial Services

Analysts at the brokerage expect de-growth in revenue passenger kilometer (RPK) – a metric that shows the number of kilometers traveled by paying passengers -- by 88 per cent YoY/QoQ at 2.6 billion due to ban on air travel. Additionally, it expects yields to decline by 10 per cent YoY and 2 per cent sequentially.
 

On the operational front, EBITDA loss is seen at Rs 801.9 crore, down from EBITDA profit of Rs 2,527.6 crore clocked in Q1FY20. In Q4FY20, the same was Rs (-) 135.3 crore. That apart, loss before tax is seen at Rs 1,901.3 crore.

JM Financial

“Airlines have been financially bleeding with a monthly net cash burn of over Rs 500 crore for IndiGo, as per our estimate. The first set of measures undertaken by the company such as pay cuts, leave without pay and various other cost initiatives were clearly not enough to off-set the decline in revenues. The market leader has now decided to layoff a tenth of its workforce. As the cash reserves dwindle (Rs 8,930 crore unrestricted as at Mar’20), IndiGo will have to resize its business (current fleet strength at 250) and re-align costs in tandem,” said analysts at the brokerage in a results preview note.

For the quarter under review, it sees the passenger revenue at Rs 773.3 crore, while ancillary revenue is seen at Rs 549.1 crore. The EBITDAR and EBITDA are seen at Rs 1,600 crore and Rs 1,693.3 crore, respectively. On the whole, net loss is pegged at Rs 1,938.5 crore.

Centrum Broking

Analysts at the brokerage estimate the airline to clock a net loss of Rs 2,672.6 crore driven by low traffic volume, low fleet utilisation and poor coverage of fixed costs.

The revenue is seen at Rs 556.8 crore, while EBITDAR is pegged at Rs (-) 1,307 crore.

According to the analysis, the load factor is seen around 52.3 per cent for the quarter under review, while revenue yield is seen at 4.3.

Prabhudas Lilladher

“IndiGo inducted around 7 aircrafts while it retired about 4 A320ceos post resumption of service in May. We expect IndiGo to report a yield expansion of 2.5 per cent. Suboptimal scale of operations may adversely impact profitability,” noted the analysts at the brokerage.

They see the net loss at Rs 3,215.6 crore and EBITDAR loss at Rs 1,869.4 crore.