IndiGo shares remain in spotlight after seven-day losing streak; ₹40,000 crore market cap loss

Shares of InterGlobe Aviation Ltd., the parent of IndiGo and India's largest airline, will remain in focus on Tuesday, December 9, after the stock emerged as the top loser on the Nifty 50 on Monday.

IndiGo logged its steepest single day fall since February 2022 and has now entered its seventh straight session of losses, marking its longest losing streak since February 2023.

Trading activity was unusually high, with volumes hitting a seven month peak. Nearly 1.58 crore shares changed hands compared to the 20 day average of 12.1 lakh. Delivery volumes were also sharply higher at 71.7 lakh shares versus the 20 day average of 7.3 lakh.

The stock has now shed almost ₹40,000 crore in market value over this seven day slide.

Meanwhile, the aviation regulator DGCA has received IndiGo's response to its show cause notice issued after the large scale disruptions and cancellations. The airline said it is "not possible to pinpoint exact causes yet" and has sought more time to complete a full root cause analysis.

IndiGo highlighted multiple preliminary triggers such as minor technical issues, winter schedule changes, adverse weather, system congestion and crew rostering challenges under FDTL Phase II.

The airline added that it had already been in discussions with the DGCA regarding the operational difficulties posed by the new pilot rest norms and was seeking variations or extensions.

These compounding issues, IndiGo said, began impacting on time performance in early December and eventually hit crew availability. On December 5, the airline undertook what it termed a "drastic step", a network reboot involving mass cancellations to ease congestion and reposition aircraft and crew.

Investor sentiment weakened further after Moody's described the ongoing disruptions as "credit negative," cautioning that IndiGo may face revenue losses due to customer refunds, compensation payouts and possible regulatory penalties.

The carrier commands nearly 65% of India's domestic aviation market, and the disruptions have cast a shadow on expectations of an earnings recovery already strained by higher ATF prices and a weakening rupee.

Jefferies said that IndiGo is also dealing with elevated crew costs and currency pressures. The brokerage added that IndiGo's lean, high utilisation model has been particularly affected by the new pilot rest rules that prevent airlines from substituting weekly rest with leave.

InterGlobe Aviation shares closed 8.62% lower on Monday at ₹4,907.50. The stock has dropped more than 15% over the last five sessions.