Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

InterGlobe Aviation - Strengthening balance sheet a long-term positive - ICICI Securities

Posted On: 2021-06-09 05:40:25 (Time Zone: UTC)


InterGlobe Aviation (IndiGo) will remain one of the biggest beneficiaries of the eventual recovery of air traffic from the covid-induced depression. Confidence in balance sheet has been significantly restored with availability of funds from QIP (Rs30bn), SLB and credit lines (Rs45bn) and the already-existing free cash of Rs71bn totalling to Rs146bn. This should help IndiGo sail through another challenging year in the event of a strong covid hit akin to FY21. The cost structure remains competitive with induction of neos (42%/14% of fleet is A320/321 neos as of FY21 and total neo share could rise to 90% by FY23-end). The cargo freighter initiative (A321ceos) diversifies the revenue stream and can contribute total revenues in FY23. Upgrade to BUY (from Hold) with a revised target price of Rs2,000 based on 20x FY23E EPS of Rs100.

- Confidence in balance sheet restored. Cash burn reduced from Rs300mn per day in Q1FY21 to Rs250mn in Q2FY21, Rs150mn in Q3FY21 and Rs190mn in Q4FY21. However, there will be higher cash burn in Q1FY22 due to the impact of covid second wave. There are signs of the second wave receding and there is pick-up in vaccination efforts. Even if there were to be a covid impact in FY22 similar to FY21, IndiGo remains well placed in terms of cash on balance sheet. The combination of fund-raising through QIP (Rs30bn), SLB and credit lines (Rs45bn) and existing free cash (Rs71bn) gives available cash resource of Rs146bn.

- We factor-in a covid-hit FY22E and a normal FY23E. Compared to 46bn ASK in FY21, we factor-in 72/96bn ASK in FY22E/FY23E (FY20 ASK was 96bn) with PLFs of 80%/88% in FY22E/FY23E. We factor-in RASK/CASK (including depreciation / interest) to move from Rs3.72/3.74 in FY20 to Rs4.24/3.89 in FY23E. We expect CASK (ex-fuel) to move from Rs2.45 in FY20 to Rs2.67 in FY23E. Ancillary revenues are likely to reach 18% of total revenues in FY23E driven by cargo initiatives, which has lifted our FY23 RASK estimates. While crude (factored-in at US$60/bbl for FY22E/FY23E) remains a risk, there could be higher RASK considering pent-up demand and no major aircraft addition over next 3 years in the overall system.

- Upgrade to BUY with a target price of Rs2,000 (Rs1,515 earlier) based on 20x (unchanged) FY23E EPS (core EPS earlier) of Rs100 (unchanged). We now base multiples on normal earnings and not core income (this excludes investment income). This is due to the strategic importance of cash in the business (even more after covid) and the fact that SLB gains will largely flow through other income in the P&L apart from lower depreciation.

- Successive covid waves and increase in crude prices pose risk to earnings.

Shares of InterGlobe Aviation Ltd was last trading in BSE at Rs.1783.3 as compared to the previous close of Rs. 1753.6. The total number of shares traded during the day was 53512 in over 3375 trades.

The stock hit an intraday high of Rs. 1794.15 and intraday low of 1760. The net turnover during the day was Rs. 95118874.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.


Other Headlines:

CESC Q4FY21 Results Review Report - Loss decline, strong CF make valuation attractive - HDFC Securities

White Goods & Durables - Analysis of pressure cooker market: TTK Prestige is key beneficiary - ICICI Securities

CESC - Good earnings in a challenging environment - ICICI Securities

Somany Ceramics - Walking the talk - ICICI Securities

DB Corp - Rise in newsprint price adds to risk - ICICI Securities

CEAT - Market share ambitions remain strong - ICICI Securities

Consumer Staples & Discretionary - Worm's world view #32: Conversations with paint dealers regarding price hikes - ICICI Securities

Oil & Gas - Oil, gas & spot LNG surge to bring gains for GAIL & OIL - ICICI Securities

Asset Management Companies - Positive trends to support earnings - ICICI Securities

Q4FY21 Result Update - Lemon Tree Hotels - ICICI Direct

Q4FY21 Company Update - Globus Spirits - ICICI Direct

Q4FY21 Result Update - DB Corp - ICICI Direct

Q4FY21 Result Update - Somany Ceramics - ICICI Direct

KEC International: Company Update - Building on diversification - HDFC Securities

LIC Housing Finance - Q4 FY21 Result Update - YES Securities

Entertainment Network Ltd - Beating on solutions business - ICICI Securities

Asahi India Glass - Operating leverage, product mix aid margins - ICICI Securities

Whirlpool of India - Market leading revenue growth - ICICI Securities

Lemon Tree Hotels - Wait for recovery gets longer - ICICI Securities

LIC Housing Finance - Stupendous growth momentum; needs to shore up provisioning and capital buffer - ICICI Securities

Quant Pick - Bank of Baroda - ICICI Direct

Company Update - Amara Raja Batteries - Investor Event Outcome - ICICI Direct

Q4FY21 Result Update - Bhel - ICICI Direct

Q4FY21 Company Update - NRB Bearings - ICICI Direct

CESC - Q4FY21 First Cut - ICICI Direct

Q4FY21 Result Update - Entertainment Network India - ICICI Direct

LIC Housing Finance Results Review Report - Balance sheet beefs up; P&L to stay soft - HDFC Securities

Jubilant FoodWorks 4QFY21 Results Review Report - Missing excitement; recovery priced in - HDFC Securities

BFSI Sector Update - MFI Consultation Paper Takeaways - Incrementally positive for NBFC-MFIs - HDFC Securities

Q4FY21 Result Update - JK Cement - ICICI Direct

Q4FY21 Result Update - Minda Industries - ICICI Direct

Stock Tales - Indo Count Industries - ICICI Direct

IPO Review - Krishna Institute of Medical Sciences Ltd - ICICI Direct

Q4FY21 Company Update - Greenply Industries - ICICI Direct

IPO Review - Dodla Dairy Ltd - ICICI Direct

Lemon Tree Hotels - Q4FY21 First Cut - ICICI Direct

Jubilant Foodworks - Q4FY21 investor call takeaways - YES Securities

Greenply Industries Ltd - Q4 FY21 Result Update - YES Securities

Whirlpool of India Ltd - Q4 FY21 Result Update - YES Securities

New India Assurance Report - CoRs disappoint yet again - HDFC Securities

Maintain BUY on Kajaria Ceramics - Performance shines through; outlook bright - HDFC Securities

Retain ADD on Deccan Cement - Volume strong; high other expense dents margin - HDFC Securities

Reiterate ADD on NHPC - Lower generation impacts earnings - HDFC Securities

Maintain BUY on JK Cement - Robust volume and utilisation - HDFC Securities

Maintain BUY on DLF - Gaining traction - HDFC Securities

Maintain BUY on Capacite Infraprojects - Marginal miss - HDFC Securities

DLF Ltd - Q4 FY21 Result Update - YES Securities

Greenply Industries Ltd - Q4FY21 first cut - YES Securities

Coal India - Coal makes a comeback - ICICI Securities

Kajaria Ceramics - Q4FY21 beat largely priced in - ICICI Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020