INDIGO - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.5
| Stock Code | INDIGO | Market Cap | 1,77,393 Cr. | Current Price | 4,590 ₹ | High / Low | 6,232 ₹ |
| Stock P/E | 39.1 | Book Value | 220 ₹ | Dividend Yield | 0.22 % | ROCE | 17.3 % |
| ROE | 104 % | Face Value | 10.0 ₹ | DMA 50 | 5,059 ₹ | DMA 200 | 5,280 ₹ |
| Chg in FII Hold | -3.45 % | Chg in DII Hold | 3.50 % | PAT Qtr | 1,912 Cr. | PAT Prev Qtr | -2,614 Cr. |
| RSI | 33.4 | MACD | -131 | Volume | 4,86,915 | Avg Vol 1Wk | 12,74,250 |
| Low price | 4,158 ₹ | High price | 6,232 ₹ | PEG Ratio | 0.92 | Debt to equity | 8.83 |
| 52w Index | 20.8 % | Qtr Profit Var | -21.7 % | EPS | 83.7 ₹ | Industry PE | 17.5 |
💹 Core Financials: Indigo (InterGlobe Aviation) shows strong profitability with ROE at 104%, reflecting exceptional efficiency in equity utilization. ROCE at 17.3% is moderate, indicating decent capital efficiency. Quarterly PAT of ₹1,912 Cr. marks a turnaround from a loss of ₹2,614 Cr. in the previous quarter, though profit variation remains volatile (-21.7%). Debt-to-equity ratio of 8.83 is very high, raising concerns about leverage and financial risk. Dividend yield is minimal at 0.22%, suggesting limited shareholder payouts.
📊 Valuation Indicators: Current P/E of 39.1 is significantly higher than the industry average of 17.5, indicating overvaluation. P/B ratio (~20.8) is steep relative to book value. PEG ratio of 0.92 suggests moderate growth-adjusted valuation. Intrinsic value analysis points to the stock being expensive at current levels, with limited margin of safety.
🏢 Business Model & Competitive Advantage: Indigo operates as India’s largest airline, with a low-cost carrier model that emphasizes operational efficiency, high aircraft utilization, and competitive pricing. Its advantage lies in scale, strong domestic market share, and cost leadership. However, high debt and exposure to fuel price volatility remain structural challenges.
📈 Entry Zone: Technical indicators (DMA 50: ₹5,059, DMA 200: ₹5,280, RSI: 33.4, MACD: -131) suggest bearish momentum. An attractive entry zone lies between ₹4,200–₹4,400, closer to its recent low of ₹4,158. Investors should wait for stability before accumulating.
🕰️ Long-Term Holding Guidance: Indigo offers strong brand positioning and market dominance in Indian aviation. However, high debt and overvaluation limit near-term attractiveness. Long-term investors may consider holding only if accumulated at lower levels, with patience for cyclical recovery in aviation demand.
Positive
- Exceptional ROE (104%)
- Turnaround from quarterly loss to profit
- Strong domestic market share and cost leadership
- Increase in DII holdings (+3.50%)
Limitation
- High debt-to-equity ratio (8.83)
- Overvalued compared to industry (P/E 39.1 vs 17.5)
- Low dividend yield (0.22%)
- Volatile quarterly profit variation (-21.7%)
Company Negative News
- Decline in FII holdings (-3.45%)
- Weak technical momentum (RSI 33.4, MACD -131)
- High leverage raises financial risk
Company Positive News
- Strong quarterly profit turnaround
- Rising DII confidence (+3.50%)
- Continued dominance in Indian aviation market
Industry
- Aviation sector is cyclical, sensitive to fuel prices and demand
- Industry P/E at 17.5, much lower than Indigo’s valuation
- Long-term growth supported by rising air travel demand in India
Conclusion
Indigo is a market leader with strong brand and operational efficiency, but high debt and stretched valuations limit attractiveness. Investors should consider entry around ₹4,200–₹4,400 for better risk-reward. Suitable for long-term holding only if accumulated at lower levels, with patience for cyclical recovery in aviation demand.
Would you like me to also prepare a comparative HTML snapshot of Indigo versus SpiceJet and Air India to highlight relative strengths and risks in the aviation sector?