IndiGo stock continues to languish despite a hike in airfares

Ability of market to absorb increase will weigh on stock

Despite a hike in air fares through a fuel surcharge, shares of InterGlobe Aviation (IndiGo) continue to languish, falling 23 per cent from its 52-week highs over a month ago. While the move to hike prices by Rs 200-400 based on route length is positive it is not enough to overcome the steep yield declines witnessed in the March quarter. 

Yields in the March quarter fell 5.5 per cent over the year-ago quarter and 10.5 per cent over the December quarter. 

Analysts at JP Morgan say that the price rise would cover about 65 per cent of the cost inflation