Synopsis: IndiGo’s recent operational disruptions triggered earnings cuts and near-term concerns, but several brokerage targets suggest the downside may already be priced in. While some analysts expect recovery momentum, others caution about long-term structural risks.
InterGlobe Aviation, the parent company of IndiGo, witnessed a mild upward movement in its stock on Friday as fresh analyst targets hinted that the worst of the turbulence may already be reflected in the share price. The airline recently faced one of its most severe operational breakdowns in years, prompting research firms to cut forecasts and warn of near-term profitability pressure.
Operational Disruptions Hit Hard
According to Nuvama Research, IndiGo suffered intense operational turbulence following the rollout of revised Flight Duty Time Limitations (FDTL). The transition, which began on November 1, 2025, triggered:
- Over 4,500 flight cancellations
- Acute pilot shortages
- A DGCA-enforced 10% reduction in the domestic winter schedule
Nuvama noted that these issues forced IndiGo to slash its Q3 guidance and accept weaker growth in Available Seat Kilometres (ASK) and Passenger Revenue Per Available Seat Kilometre (PRASK).
Impact on Financials
The disruptions have had notable financial consequences:
- Estimated 40% hit to Q3FY26 EBITDAR
- Higher passenger compensation payouts
- 7% surge in aviation turbine fuel prices
- Expected soft yields despite improved load factors
- Additional pressure from ?15 billion in forex losses and refund penalties
The revised FDTL norms, which expanded rest hours and limited night operations, led to a severe mismatch in crew resources. Though DGCA later paused the norms for the A320 fleet until February 2026, analysts believe the damage to near-term performance is already done.
Brokerage Targets: Mixed Signals
Brokerages have released a wide range of targets, indicating a lack of consensus:
- HSBC: ?5,977 (Bullish; no structural damage seen)
- UBS: ?6,350 (Positive outlook)
- Jefferies: ?7,025 (Strong recovery potential)
- Emkay Global: ?6,300 (IndiGo remains vital; normalization expected)
- Nuvama: ?5,069 (Hold; downside risk limited)
- Investec: ?4,040 (Bearish; further downside possible)
While some targets indicate strong upside potential, Investec’s projection highlights concern over sustained pressure.
Valuation & Long-Term Risks
Nuvama cut its FY26, FY27, and FY28 EBITDAR estimates by 14%, 4%, and 3%, respectively, reducing its target price by 5% to ?5,069. The brokerage also pointed out:
- Elevated valuations at 17x FY27E and 11x FY28E earnings
- Possible long-term risk if the airline is pushed to reduce its 65% domestic market share
This could challenge growth assumptions in the years ahead.
Is the Worst Behind?
Despite the rough patch, many analysts believe the worst of the disruption may be already factored into the stock price. On Friday, IndiGo traded 0.95% higher at ?4,865, hinting at stabilizing sentiment.
While operational issues, regulatory pressure, and cost headwinds persist, IndiGo’s dominant market position and expected normalization of operations leave room for potential recovery — provided execution improves.
Disclaimer: This article is based on analyst reports, brokerage notes, and publicly available financial information. It should not be considered financial advice. Investors should conduct their own research or consult a certified advisor before making investment decisions.
