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Morgan Stanley Cuts IndiGo Price Target Amid Industry Pressures
InterGlobe Aviation, which operates IndiGo, saw its shares drop as much as 3% this week. The decline followed Morgan Stanley's decision to lower its price target by 9% to ₹5,913, down from ₹6,498. This move highlights analyst worries about the airline's immediate profitability.
Rising Oil Costs and Weaker Demand Squeeze Airlines
Morgan Stanley pointed to several pressures affecting Indian carriers. Soaring global crude oil prices significantly increase operational costs, especially for jet fuel which is a major airline expense. This is worsened by signs of weakening passenger demand and a depreciating rupee, further reducing profit margins. However, Morgan Stanley kept its 'overweight' rating, indicating confidence in IndiGo's long-term cost management strengths.
Challenging First Half Forecast for Fiscal Year 2027
The brokerage expects InterGlobe Aviation to face a difficult first half of the fiscal year 2026-27, with a gradual recovery anticipated in the latter half. This forecast depends on the airline's efficient cost management and potential market improvements. The stock hit an intraday low of ₹4,510 on the National Stock Exchange, showing investor reaction.