Gangwal stake sale buzz: IndiGo dips 5% amid block deal of 18 mn shares

At 09:15 am; around 18.19 million equity shares representing 4.71 per cent of total equity of IndiGo have changed hands on the BSE, the exchange data shows.

Shares of InterGlobe Aviation, which operates low-cost carrier IndiGo, dipped 5 per cent to Rs 2,425 on the BSE in Wednesday’s intra-day trade after nearly 5 per cent equity of the company changed hands via block deal.

At 09:15 AM; around 18.19 million equity shares representing 4.71 per cent of total equity of IndiGo changed hands on the BSE, the exchange data shows. However, the names of the buyers and sellers were not ascertained immediately.

The family of IndiGo co-founder Rakesh Gangwal was likely to sell shares worth Rs 3,730 crore through a block deal on Wednesday, according to a term sheet, reports suggested. This is part of Gangwal’s plan to bring down his family's stake in the company.

The offer floor price for the deal was to be Rs 2,400 per share, which was a 5.8 per cent discount to the company’s last closing price of Rs 2,549 per share. The Gangwal family put up 15.6 million shares for sale, representing approximately 4 per cent of its existing outstanding shares in the company.

Meanwhile, thus far in the financial year 2023-24, IndiGo has outperformed the market by surging 33 per cent till Monday. In comparison, the S&P BSE Sensex has rallied 11 per cent during the same period. At 09:39 AM; the stock quoted 4 per cent lower at Rs 2,443, against 0.26 per cent decline in the benchmark index. A combined 27.4 million shares changed hands on the BSE and NSE.

IndiGo serves 104 destinations and connects 500 direct city pairs. Going forward, IndiGo said it will leverage its simple yet well executed product and an unparalleled network to make international expansion as the next leg of its growth. Further, IndiGo has strategic partnerships with seven international airlines and continues its discussions with more global airlines.

IndiGo in its FY23 annual report said that it was working closely with airframe and engine manufacturers to ensure there is minimum economic and operational impact. Additionally, to meet the interim operational challenges, IndiGo has taken various measures such as lease extension of aircraft due to be redelivered, deferring phasing out of CEOs, getting aircraft on ACMI, etc. to reduce operational disruptions.

On March 20, 2023, ICRA revised the outlook for the company to stable from negative and reaffirmed the company’s short-term and long term rating. ICRA reported that change in outlook was on account of improvement in operating environment for the airline industry, aided by a healthy improvement in passenger volumes and moderation in Aviation Turbine Fuel (ATF) prices over past few months. Expectation of sustained healthy passenger volumes coupled with relatively stable operating environment provides comfort and raises optimism for the company going forward.

ICRA has highlighted challenges of volatility in fuel and foreign exchange, rising competition within industry and increase in the company’s overall debt. However, ICRA also acknowledged that sector was able to pass on the cost to certain extent by increase in yields without impacting demand. Further ICRA has noted improvement in leverage ratios of the company.