Shares of InterGlobe Aviation, which operates IndiGo, declined nearly 4 per cent in early trade on Friday after the airline reported a steep drop in quarterly profit.

The stock fell nearly 4 per cent to ₹4,722.50 on the NSE before trimming losses to trade around ₹4,854 at 9.50 am, still down about 1 per cent.

The weakness followed the company’s December-quarter results, which showed net profit plunging 77.6 per cent year-on-year to ₹549 crore, compared with ₹2,449 crore in the same period last year.

The earnings print sparked mixed reactions from brokerages, with most maintaining positive long-term views even as they acknowledged rising costs and near-term uncertainties.

Profit hit by exceptional items and disruptions

Goldman Sachs said IndiGo reported profit before tax of ₹21 billion for the quarter, broadly in line with its estimates, but noted that after adjusting for exceptional losses of ₹15.5 billion, underlying PBT stood at ₹5.6 billion. The brokerage attributed the exceptional costs to the implementation of the new labour code and one-time disruption-related expenses.

It highlighted that costs excluding foreign exchange were lower than expected, particularly aircraft rentals, while revenue performance was steady. Yields were in line with expectations, with ticketing RASK at ₹4.51, and capacity growth came in slightly ahead. Goldman reiterated its Buy rating and raised its target price to ₹6,000 from ₹5,600, adding that management has guided for 10 per cent year-on-year ASK growth in the March quarter, largely driven by international operations.

UBS also retained a buy rating with a target price of ₹6,170, though it cautioned that the near-term outlook remains weak despite strong medium- to long-term prospects. The brokerage described the quarter as a “decent show” given disruptions in early December, noting that management expects about 10 per cent ASK growth in the fourth quarter, led primarily by overseas expansion.

However, UBS pointed out that IndiGo has raised its guidance for CASK growth excluding fuel and foreign exchange to the mid-to-high single-digit range from earlier expectations of low single digits, and sees yields moderating by early to mid-single digits on a high base. The airline inducted 24 aircraft during the quarter, including 18 through GIFT City, which UBS said underlines its expansion plans.

Domestic brokerage Motilal Oswal struck highlighted several near-term headwinds, including reduced capacity, fare caps, rupee depreciation and rising damp lease costs. The brokerage said the airline remains confident about its long-term growth strategy, anchored by a strong domestic network and expanding international connectivity.

Valuing the stock at nine times FY28 estimated EBITDAR, the brokerage arrived at a target price of ₹6,100 and reiterated its buy recommendation, reinforcing the view that IndiGo’s long-term fundamentals remain intact despite short-term pressures.

Adding to the range of brokerage reactions, another domestic brokerage Elara Capital reiterated its buy rating on InterGlobe Aviation and maintained its target price of ₹6,020, citing structural strengths in costs and market positioning.

The brokerage said stable Airbus aircraft deliveries and a pickup in demand—supported by new airports coming up in Delhi and Mumbai—should allow IndiGo to sustain its leadership in both costs and market share. On the back of management guidance, earnings trajectory and a weaker rupee, Elara marginally trimmed its EBITDA estimates for FY26, FY27 and FY28 by 2 per cent, 3 per cent and 5 per cent, respectively.

Citi flags softer Q4 but sees normalisation

Citi, which has a buy rating and a target price of ₹5,700, said the December quarter was expected to be hit sharply by disruption related to FDTL issues, but the financial impact turned out to be lower than feared. While operational parameters were largely in line with forecasts, yields were better than anticipated.

The brokerage said it is tweaking estimates to reflect slightly higher costs and marginally lower yields after management flagged some softness in the March quarter. Still, Citi believes IndiGo’s operations are normalising, the impact of disruptions and penalties was not very severe, and the airline continues to gain from strong market share and international route expansion, aided by the induction of A321 XLR aircraft.

Morgan Stanley echoed the broadly constructive stance, maintaining an overweight rating and raising its target price to ₹6,498 from ₹6,359. It said IndiGo’s fiscal third-quarter PBT was 18 per cent ahead of its estimates, even as the company lowered its fourth-quarter capacity guidance and raised its cost outlook.

The brokerage noted that the airline now expects fourth-quarter capacity growth of 10 per cent year-on-year, implying full-year ASK growth of about 11 per cent. It added that IndiGo is taking steps to improve operations and that with gradual normalisation in the domestic market, curtailed capacity could return over time.

In contrast to the broadly bullish consensus, Investec struck a more cautious tone, reiterating a sell recommendation with a target price of ₹4,050. The brokerage described the quarter as weak and said visibility has deteriorated after management cut fourth-quarter capacity growth guidance from the mid-to-high teens to around 10 per cent.

Investec also warned of rising regulatory risks, saying stricter implementation of FDTL norms could constrain network expansion, while cost pressures are likely to intensify. It has slashed its FY26 earnings per share estimate by 35 per cent, though it left projections for FY27 and FY28 unchanged for now.

With shares under pressure following the earnings disappointment, investors will be closely watching how IndiGo navigates rising costs, regulatory challenges and yield moderation in the coming quarters, even as it pushes ahead with aggressive international expansion plans.

Published on January 23, 2026