IndiGo shares fall after DGCA curtails flight operations; MS adds to 'focus list'

Shares of Interglobe Aviation Ltd., parent company of IndiGo, fell in early trading on Wednesday, December 10, as the stock may react to multiple news triggers today.

Firstly, the DGCA has asked the airline to now cut its flight operations by 10% for its winter schedule, compared to the earlier order of 5%.

The order means that the number of daily flights will be curtailed between 220-230 flights, compared to the 110-115 flights that could have been curtailed had the cut been 5%.

IndiGo's original winter schedule of this year was supposed to have 2,225 - 2,230 flights. However, a 10% would now imply the number of flights to be between 2,000 - 2,100.

This would mean that the total number of flights for IndiGo during the winter schedule will be even lower compared to the summer schedule, which had between 2,100 - 2,200 flights.

In a video message on Tuesday, IndiGo CEO Pieter Elbers stated that the restoration of network and flights is being done on a war footing, with on-time performance having improved to 86% on December 8 from 78% on December 7.

IndiGo has also been added to Morgan Stanley's focus list on Wednesday, at the expense of Coforge, which has been excluded from the list.

Morgan Stanley wrote in its note that cost pressures are mounting for IndiGo due to the FDTL norms, rupee weakness and higher jet fuel prices. It went on to add that the long-term growth story remains intact, despite the near-term headwinds.

IndiGo shares are now trading below their financial year 2027 estimated EV / EBITDA multiple of 8.2x, which is lower than its pre-Covid median of 8.5x.

26 analysts have coverage on IndiGo, of which 21 have a "buy" rating, two say "hold", while three have a "sell" rating.

Shares of IndiGo are down 1.6% in early trading on Friday at ₹4,890. The stock had snapped a seven-day losing streak on Wednesday.