IndiGo falls 3% as shares worth ₹11,000 cr change hands; Rakesh Gangwal looks to exit

Shares of InterGlobe Aviation, which runs low-cost carrier IndiGo, plunged nearly 3% in opening trade on Thursday amid strong volume as stock worth over ₹11,000 crore changed hands over the counter. IndiGo promoter and co-founder Rakesh Gangwal, who holds 5.89% stake in the airline, is looking to exit the company by selling his stake. According to various reports, Gangwal was expected to pare his entire stake in InterGlobe Aviation today at a floor price of ₹4,593 per share.

Driven by strong volume, IndiGo shares declined as much as 2.96% to ₹4,714.90 as 2.36 crore shares of the airline operator changed hands over the counter in the first hour of trade so far. Early today, the country’s most valued airline stock opened lower at ₹4,740, down 2.45% against the previous closing price of ₹4,859.20.

At the time of reporting, shares of IndiGo were trading 1.75% lower at ₹4,773.85, with a market capitalisation slipped to ₹1.84 lakh crore. In the previous session, the aviation heavyweight touched its 52-week high of ₹4,944.60, with the share price doubling from its 52-week low of ₹2,334.95 hit on September 28, 2023.

In the last one year, IndiGo shares have risen over 91%, while it surged nearly 51% in the past six months. In the calendar year 2024, the stock gained as much as 60%, while it added 7% in a month.

In February 2022, Gangwal, who controlled a 36.6% stake in the company, stepped down from the airline’s board after years of dispute with Rahul Bhatia, with whom he co-founded IndiGo in 2005. He announced to reduce stake in the company over the next five years. In the last two years, Gangwal pared stake in the airline in multiple tranches, bringing down his holding to 6%. Recently in March this year, he offloaded a 5.8% stake in the airline through a bulk deal and raised ₹6,785 crore.

In June this year, Rahul Bhatia, the promoter and managing director of the airline, sold 2% stake in IndiGo for ₹3,292.3 crore through his entity Interglobe Enterprises Private Ltd via block deal. Interglobe Enterprises Private currently holds a 35.75% stake in IndiGo, as per the latest data available on the exchange.

According to domestic brokerage Nuvama, the free float is expected to increase to the maximum foreign float limit of 49%. “This float increase is anticipated to generate an inflow of approximately $35 million, translating to 0.6 million shares, with a 0.4-day impact.”

Additionally, the FTSE weight adjustment is expected to be minor, around $15 million, which equates to 0.3 million shares, with a 0.2-day impact, according to Nuvama Alternative.

“I don’t anticipate a significant price impact from passive flows, as the days' impact is low. Overall, the fundamental and quantitative momentum for INDIGO remains very strong, and the stock should continue to perform well,” says Abhilash Pagaria, Head, Nuvama Alternative and Quantitative Research.

IndiGo, which holds around 60% of the domestic aviation market share, placed an order for 30 Airbus A350-900 widebody aircraft in April this year. The airline has purchase rights for an additional 70 Airbus A350 Family aircraft “for possible future needs under certain conditions”. With this order, IndiGo will become the third Indian airline to operate widebody aircrafts after Tata Group’s Air India and Vistara.

IndiGo plans to introduce wide-body aircraft to its fleet and has ordered 30 Firm Airbus A350-900 aircraft, enabling the airline to expand its network. The deliveries of the aircraft, powered by Rolls Royce’s Trent XWB engine, are expected to start from 2027. As per the company, the exact configuration of the aircraft will be decided at a later stage.

Currently, IndiGo operates over 350 aircraft. Last year, in June 2023, IndiGo placed the largest ever single aircraft order by any airline for 500 aircraft with Airbus. With that, the outstanding orderbook of A320 Family aircraft stands at almost 1,000 aircraft which are yet to be delivered well into the next decade. This IndiGo order-book comprises a mix of A320NEO, A321NEO and A321XLR aircraft.

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