IndiGo soars 8% from day's low on Rakesh Gangwal's likely large block deal

As per Bloomberg, IndiGo promoter Rakesh Gangwal raised about $820 million from selling part of his holding, in the largest block equity sale in the country since 2019

Shares of InterGlobe Aviation- the parent firm of IndiGo – jumped 5 per cent on BSE to an intra-day high of Rs 3,262 in Monday’s trade after over 20 million shares of the airline changed hands via a block deal. With this, the stock bounced back 8 per cent from its intra-day low of Rs 3,015.10.

At 09:15 am; around 22.88 million equity shares, representing 5.9 per cent of the total equity of IndiGo, changed hands on the BSE, the exchange data shows. The names of the buyers and sellers were not ascertained immediately.

As per a Bloomberg report, IndiGo promoter Rakesh Gangwal raised about $820 million from selling part of his holding, in the largest block equity sale in the country since 2019.
 

 

Gangwal sold 22.5 million shares of Indigo at Rs 3,015.10 per share. The number of shares on sale was increased from the 12.75 million initially expected and the final price was above the floor indication of Rs 2,925 each, the report said. READ HERE

Further, till 02:24 pm; a combined 32.26 million shares or 8.35 per cent of total equity of the company had changed hands on the BSE and NSE.

Another media report said that Rakesh Gangwal was likely to sell a 3.3 per cent stake (130 million shares) in the company to raise around $450 million. 
 

At the end of December 2023 quarter, Rakesh Gangwal held 11.72 per cent stake in the company, the shareholding pattern data shows.

Earlier, on August 16, 2023, Rakesh Gangwal had sold 5.77 million shares or 1.5 per cent stake in IndiGo via block sale. Institutional investors had bought the shares in block deals.

The stock had hit a record high of Rs 3,300 on February 5. In the past four months, the stock has rallied nearly 30 per cent.

With 5 consecutive quarters of profit IndiGo continues to recover from the losses of Covid and have now become net worth positive again.

For the third quarter of financial year 2024 (Q3FY24), the company had reported a profit after tax of Rs 3,000 crore with a profit after tax margin of 15.4 per cent.

The management said the series of profitable growth is attributable to the confidence shown by passengers who chose to fly with the company.

"Indigo’s market leadership position, ability to leverage its network, cost efficient fleet, and healthy cash position reflect our positive outlook for the stock. Healthy passenger volume, strong ticket prices, and an ease in fuel prices will support earnings momentum in FY24", said Geojit Financial Services in a result update.

Meanwhile, around 75 planes of IndiGo have been grounded (of total 136 Pratt & Whitney [PW] engine-fitted fleet) versus 40 in Q3FY24, as P&W continues with engine inspections that may take 8-10 months.

As per Elara Capital estimates, 75 grounded planes hit 10 per cent of domestic aviation capacity. And the remaining 60 P&W planes of IndiGo are nearing lease expiry. 

The brokerage expects domestic demand-supply to be mostly balanced in H1FY25, post which the domestic market may witness oversupply in H2 when these 75 grounded aircraft of IndiGo may fly again while competitors may continue to add fleet at 10 per cent of the total domestic capacity.

However, analysts also expect FY23-28E domestic passenger traffic CAGR at 12-15 per cent, driven by government focus on improving air connectivity beyond tier 1 /2 cities, large order book of domestic carriers (1,606 outstanding order book as on December 2023) – 350 net deliveries are expected in the next five years (600 new deliveries less 175 old fleet retirals) and higher capacity at existing key metro airports.