IndiGo shares fall 5% amid buzz over stake sale by Gangwal family

Shares of Interglobe Aviation, the parent company of IndiGo, dropped nearly 5% in opening trade on Wednesday, driven by a surge in volume trade amid a report that one of its promoter entity plans to sale stake in the aviation company through a block trade. The Gangwal family led by Rakesh Gangwal looks to offload around 4% stake in the low-cost airline to raise around ₹3,735 crore through the transaction. As per the report, the family has put on block 1.56 crore shares at a floor price of ₹2,400 per share, a discount of 5.8% to Monday’s closing price.

In February 2022, Rakesh Gangwal stepped down from the board of Interglobe Aviation and said he would dilute his stake in the company over the next five years. In September 2022, the Gangwal family sold 2.8% shares in IndiGo for ₹2,000 crore, followed by 4% for ₹2,900 crore in February 2023. At the end of June 2023 quarter, the family owned a 29.72% stake in IndiGo Airlines.

Reacting to the news, IndiGo shares opened 2.9% lower at ₹2,474.70 against the previous closing price of ₹2,548.35 on the BSE. In the early trade so far, the aviation heavyweight declined as much as 4.8% to ₹2,426.15, while the market capitalisation slipped to ₹95,030 crore. On the volume front, 57 lakh shares changed hands over the counter compared with a two-week average of 0.28 lakh stocks.

At the current price, IndiGo shares trade nearly 12% lower than its 52-week high of ₹2,745.95 touched on July 13, 2023. However, the aviation stock has risen 45% from its 52-week low of ₹1,676 on November 9, 2022.

Earlier this month, IndiGo, the country’s largest airline in India by passengers carried and fleet size, released its June quarter earnings report which showed that its consolidated profit after tax surged 390.4% to ₹3,090.6 crore as against ₹1,064.3 crore in the same period last year. Sequentially, the company’s profit surged by 236% quarter-on-quarter from ₹919.2 crore in the March quarter of FY23. This was the highest-ever profit recorded by the domestic air carrier, aided by weak competition and high ticket prices.

The revenue from operations of IndiGo surged by 29.8% to ₹16,683 crore as against ₹12,855.2 crore in the Q1 of FY24. Sequentially, the revenue from operations surged by 17.4% from ₹14,160.6 crore in Q4 of FY23.

The EBITDA (earnings before income, tax, depreciation and amortisation) stood at ₹5,210.9 crore during the June quarter, witnessing a surge of 626.8%, as against ₹716.9 crore in the same period last year. The EBITDA margin expanded to 31.2% in the June quarter as against 5.6% in the same period last year.

As of June 30, 2023, the airline’s total cash balance stood at ₹27,400 crore comprising ₹15,691.1 crore of free cash and ₹11,709.0 crore of restricted cash. The capitalised operating lease liability stood at ₹43,086.2 crore and the total debt at ₹46,291.9 crore.

During the quarter under review, the domestic air carrier has a fleet of 316 aircraft including 20 A320 CEOs, 166 A320 NEOs, 87 A321 NEOs, 39 ATRs, 2 A321 freighters and 2 B777 (damp lease). IndiGo operated 1,873 daily flights during the quarter including non-scheduled flights. During the quarter, the airline provided scheduled services to 78 domestic destinations and 22 international destinations.

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