Don't buy IndiGo shares now, says this strategist

Shares of Interglobe Aviation, which operates the IndiGo airline, are down over 16.3% in the last one month as a slew of unexpected cancellations stranded thousands in the first week of December.

While acknowledging that IndiGo runs a "lean operation," Orton believes there's still significant regulatory risk. "I wouldn't be a dip buyer right now until we know how regulation might shake out," he said.

In the inevitable outrage that followed the mass cancellation of flights, India's largest airline by market share has been accused of everything from mismanagement to malicious obstinacy intended to overturn regulation.

The Compeitition Commission of India is reportedly investigating if the airline violated norms, and its dominant market share of over 60% was a contributing factor to the disruption.

The airline’s own data showed that the company was reducing the pool of pilots when it should have been expanding aggressively.

IndiGo has offered travel vouchers worth ₹10,000 to passengers affected by the cancellations, in addition to government-mandated compensation of ₹5,000 to ₹10,000 depending on the block time of the cancelled flight.

The estimated cost of the damages payable to customers is about ₹500 crore. The sell-off in the stock has already eroded $5 billion off the company's market capitalisation, which currently stands at ₹1.9 lakh crore.

Orton's call is in stark contrast to UBS which put out a 'buy' call on Indigo shares on Friday, with a target price that was 31% higher than the preceding day's closing tick.

21 out of the 26 analysts covering Interglobe Aviation still have a 'buy' call on the stock with a consensus target price of over ₹6,002 a share in the next 12 months.

Investec is the only one with a sell call on the stock with a target price of ₹4,050 a share.

The airline has streamline the ops since the wave of disruptions 10 days ago. As of the latest data shared by the Gurugram-based company, IndiGo operated over 2,050 flights on Saturday, across all 138 destinations. There were two cancellations on 'technical' grounds.

The company has already cut its guidance for the third quarter ending December 2025. Market will watch out for the fourth-quarter guidance in the coming days.  at this moment.

Consensus standalone for FY26 earnings have dropped to ₹161.42 a share from ₹231 at the start of the December quarter — a steep 30% reduction. FY27 earnings projections have also been trimmed by 14% to ₹226.80 a share, according to Bloomberg data.

InterGlobe Aviation reported a net loss of ₹2,614 crore for the quarter-ended September, on a revenue of ₹18,555 crore. Earnings per share stood at ₹67.6 in those three months.

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