IndiGo Shares Drop 4% After Citi Cuts Target Price Amid Headwinds

The brokerage cut its target price by about 10.5 per cent to Rs 5,100 per share from the earlier Rs 5,700.

Despite the reduction, Citi maintained its "buy" rating on the stock. The revised target still suggests a potential upside of around 17 per cent from the stock's previous closing price.

According to Citi, IndiGo has faced several negative developments over the past year that have affected its operations and outlook.

The brokerage noted that the airline's performance was first impacted by an adverse geopolitical environment in the first quarter.

Later in the year, the implementation of stricter flight duty time limitation (FDTL) norms led to several flight cancellations, which weighed on the airline's third-quarter performance.

Just as operations were starting to stabilise, fresh geopolitical tensions emerged with the ongoing conflict involving Iran, Israel and the United States, creating further uncertainty.

The brokerage also highlighted that IndiGo's international operations have been affected by the evolving geopolitical situation.

In addition, rising fuel prices and the weakening Indian rupee could put pressure on the airline's profitability in the coming months.

However, Citi pointed out some positive developments as well. The airline managed to regain domestic market share in January, which the brokerage described as a strong recovery.

IndiGo's market share rose to 63.6 per cent in January from 59.6 per cent in the previous month, reversing an earlier decline.

Citi also noted that IndiGo continues to maintain a relatively stronger cost structure compared to many of its competitors.

Following the brokerage update, shares of InterGlobe Aviation dropped as much as 3.6 per cent during the session to hit an intra-day low of Rs 4,194.1.

By around 1:52 pm, the stock was trading 1.61 per cent lower at Rs 4,280.8 per share. Over the past one month, the stock has declined about 14.5 per cent.

- IANS