Target: ₹5,500
CMP: ₹4,194.10
The first ATF price revision after the start of the West Asia conflict saw high frenzy—OMCs (IOCL) initially hiked domestic/international rates by 115 per cent/107 per cent month on month to ₹207/$1.7 per litre, followed by the announcement of domestic scheduled airlines’ rate revision by only about 25 per cent to ₹105/litre. OMCs seem to have taken the hit for now.
Post this, Indigo has revised its fuel surcharge rates effective April 2, with domestic fares ranging from ₹275 to ₹950 for distances covering 0-500 km to over 2,000 km, with the average likely to be similar to the March 14 rate of about ₹400. However, international fuel surcharge is hiked materially, from ₹425-2,300 for the South Asia–Europe route to ₹900-10,000.
Based on Indigo’s average stage length, we estimate about a 20 per cent rise in the base fare/RASK vs a 50 per cent rise in blended fuel cost, with PBT spreads improving from pre-conflict levels; this can offset the slowdown in pax volumes and RPK (13-14 per cent of ASK deployed in the conflict-hit Gulf).
While earnings visibility is low amid the current macro volatility, we cut FY26/27/28E EPS by 13 per cent/28 per cent/7 per cent and cut our TP by 13 per cent to ₹5,500 from ₹6,300, valuing the airline at 20x March 2028E EPS. Given Indigo’s dominant position in India’s aviation market and the past precedence of emerging stronger from a crisis situation (Covid, Russia-Ukraine war) and with leadership largely in place, maintain BUY on the stock.
Published on April 2, 2026
