IndiGo shares skid over 3% amid reports of Gangwal family selling stake

Shares of InterGlobe Aviation Ltd, the parent company of IndiGo declined as much as 3.4% to hit an intraday low of ₹2,377.95 apiece on the BSE after reports emerged that Rakesh Gangwal, the co-founder of IndiGo, is planning to sell 5%-8% in the airline worth up to ₹7,500 crore.

On Monday, the scrip opened ₹2,470.05 as against the closing price of the previous session at ₹2,461.80. The scrip closed at ₹2,411.05, lower by 2.06%. At present, the aviation heavyweight's share price is trading 3.19% lower than the 52-week high of ₹2,488, which the company touched on June 9. The company’s share price is trading 59.3% higher than the 52-week low of ₹1,513.30, which the company touched on June 20 last year. During the session, the company's market capitalisation stood at ₹92,957.33 crore with 25,228 shares exchanging hands on the BSE, lower than the two-week average of 0.31 lakh shares. In the past month, three months and one year, the country’s leading airline has given 7.89%, 27.58% and 33.28% in returns, respectively.

According to reports, Gangwal and his family would sell the stake in block deals once the lock-in for shares opens on July 15. At present, Gangwal and his wife Shobha Gangwal hold 13.23% and 2.99% stake in IndiGo respectively, whereas the Chinkerpoo Family Trust holds a 13.5% stake in the airline. The exchanges have sought comments from IndiGo regarding the development.

In February this year, Shobha reportedly sold a 3.7% equity stake in a block deal. Gangwal announced his exit from the airline's board in February 2022 and said he plans to slowly reduce his equity stake in India's largest carrier over the next five years or more. 

This will be the third round of stake sale by the Gangwal family. The family had sold a 2.8% stake in IndiGo for about ₹2,000 crore in September 2022. IndiGo, which currently holds the aviation market share by more than 50%, posted a profit of ₹919.2 crore for the March quarter as against a loss of ₹1,681.8 crore in the same period last year. During the quarter under review, the airline's revenue from operations surged 76.5% year-on-year (YoY) to ₹14,160.6 crore as against ₹8,020.7 crore in the same period last year. For the quarter, the airline's passenger ticket revenue grew 80.6% YoY to ₹12,434.6 crore, whereas ancillary revenues surged by 36.6% YoY to ₹1,445.9 crore.

The airline is also reportedly in talks with French aerospace major Airbus to lease 500 narrow-body A320 jets. The potential deal is expected to eclipse Air India's historical provisional purchase of 470 aircraft to Airbus in February this year. The potential deal is expected to be worth over $50 billion at the recent Airbus list prices but would be worth less than half this price after taking into consideration discounts for bulk deals. 

IndiGo is one of Airbus’ largest customers and has ordered as many as 830 Airbus A320-family jets so far, of which around 500 are pending to be delivered. As of March 31, 2023, IndiGo had a fleet of 304 aircraft, including 21 A320 CEOs, 162 A320 NEOs, 79 A321 NEOs, 39 ATRs, 2 A321 freighters, and 1 B777.