IndiGo share price: Shares of InterGlobe Aviation, parent company of the budget carrier IndiGo, surged as much as 2.61% to ₹4,494.60 apiece in Wednesday’s trading session, even as chief executive officer (CEO) Pieter Elbers stepped down from the role on Tuesday, citing personal reasons.
The aviation stock opened at ₹4,375 in the early morning session today, as compared to the previous close of ₹4,380 on Tuesday.
Why is IndiGo share price rising today?
The aviation company shares jumped despite the CEO’s resignation as brokerage firms like Jefferies and HSBC maintained a bullish outlook on the stock.
Brokerages such as HSBC and Jefferies have reiterated their ‘buy’ ratings on the stock following the leadership change, suggesting they do not foresee any shift in the airline’s strategic direction, according to a Moneycontrol report.
HSBC has maintained a buy recommendation on InterGlobe Aviation, with a target price of ₹5,860 per share. The brokerage noted that CEO Pieter Elbers stepped down, citing personal reasons, although operational disruptions in December may have also contributed to the change in leadership.
Meanwhile, Jefferies has maintained its ‘buy’ rating on InterGlobe Aviation with a target price of ₹6,140 per share. The brokerage noted that Pieter Elbers played a significant role in expanding IndiGo’s international network and advancing plans for wide-body aircraft.
However, Jefferies pointed out that leadership transitions at the airline have historically been smooth due to the oversight of founder and managing director Rahul Bhatia, who has now assumed interim charge as chief executive.
At the same time, crude oil prices also witnessed a sharp correction on Tuesday, witnessing their steepest one-day slide in four years. Brent crude prices have surged more than 40% since the beginning of the year, as the effective shutdown of the Strait of Hormuz — through which roughly a fifth of global oil supply usually passes — has compelled producers to scale back output.
According to Harshal Dasani, Business Head at INVasset PMS, aviation turbine fuel accounts for roughly 35–40% of an airline’s operating costs, so any decline in crude directly improves margin visibility for carriers.
“Brent crude has softened in recent sessions, providing relief to aviation stocks, including IndiGo. At the same time, IndiGo continues to benefit from its dominant position in India’s aviation market with a domestic market share of over 60% and an aggressive aircraft expansion plan. Because the stock had already corrected significantly on earlier geopolitical and oil-related concerns, fresh negative news such as the CEO resignation is not triggering another sharp reaction in the market,” Dasani said.
IndiGo share price trend
IndiGo share price has remained under pressure in the near term. The aviation stock has shed 12.08% in a month, as compared to 7.17% decline in the Nifty 50 index.
Looking at the broader level, the stock has further fallen 13.75% in terms of year-to-date (YTD) and 5.23% in a year.
However, the aviation stock has outperformed Nifty 50 by delivering multibagger returns of 133.25% in three years and 161.67% in five years.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
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