IndiGo flies higher even as SpiceJet sputters into a loss in Q4: Brokerages

InterGlobe Aviation, which operates IndiGo, India’s largest domestic airline, is set to report its second successive profitable quarter during the period ended January-March 2023.

This comes amid higher traffic, strong load and better yield compared to the same period last year.

However, SpiceJet may slip into losses during the same quarter. This assessment of the aviation sector was made by brokerages in their fourth quarter results preview. Domestic traffic during January-March is estimated to have grown 5-6 per cent, sequentially, and by over 50 per cent on a year-on-year (YoY) basis.

Traffic in the sector has crossed pre-Covid levels and has sustained in the fourth quarter, which is traditionally a weak season for travel. As such, passenger yield is expected to have declined 11.5-12 per cent on a sequential basis due to the seasonality factor.

However, YoY yield improved 8 per cent in Q4 of FY23, according to Elara Securities.

IndiGo, which has seen domestic market share gain in February (55.9 per cent compared to 54.6 per cent in January), is estimated to post a net profit of Rs 864 crore in Q4, according to Centrum Institutional Research. Elara Securities and Emkay Institutional Research have pegged IndiGo’s net profit at Rs 1,134 crore and Rs 1,167 crore, respectively.

During the same period last year, InterGlobe Aviation had posted a net loss of Rs 1,682 crore owing to high fuel expenses.

Meanwhile, Elara Securities estimates SpiceJet to post a net loss of Rs 293 crore. While passenger volume for SpiceJet is expected to have increased 12 per cent YoY, it is likely to be flat on a sequential basis, it said. 

“We remain positive on the aviation sector, given strong airfare discipline shown by the industry. Crude price softening augurs well for the sector. We remain positive on IndiGo as it is best placed to capture the expected 22 per cent demand growth in H2 with its new-age Neo planes. International route expansion is expected to further bolster its bottom line,” Elara Securities said.