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IndiGo to report Q4 results on Saturday; Here's what analysts expect

The onset of the second wave and ensuing localized lockdowns across India could lead to a delay in passenger traffic recovery, say analysts
IndiGo Q4 preview: As Indian took more flights to travel amid fewer Covid-19 cases early this year, outlook for the Indian airlines began to look promising. However, as cases began to soar from early March and as fuel prices began climbing on global demand optimism, the recovery hopes faded away. 

This contrasting situation has analysts divided over InterGlobe Aviation-owned IndiGo’s March quarter performance (Q4FY21). The budget airline is scheduled to report its March quarter earnings on Saturday, June 5 where it may report lower capacity utilization, mark-to-market (MTM) loss due to rupee depreciation, and muted passenger load factor (PLF), say analysts.

"Green shoots of growth were expected at the end of December quarter of the previous fiscal (Q3FY21), supported through an increase in passenger traffic in January. Moreover, with the vaccine rollout, the aviation sector was expected to be out of headwinds. However, the onset of the second wave and ensuing localized lockdowns across India could lead to a delay in passenger traffic recovery," wrote Gagan Dixit, research analyst at Elara Capital in a co-authored report with Rachael Alva.

On the bourses, the stock price of IndiGo slipped 5 per cent on the BSE during three months to March as against a 3.6 per cent gain in the benchmark S&P BSE Sensex. 

Against this backdrop, here’s what leading brokerages expect:

Centrum Broking
Painting a grim picture, the brokerage expects IndiGo’s net loss to widen sequentially to Rs 743.3 crore from Rs 620.1 crore incurred in Q3FY21, mainly on account of 28.3 per cent QoQ rise in fuel prices. On a yearly basis, however, the loss may contract from Rs 870.8 crore reported in the March quarter of FY20 (Q4FY20).

“Our estimates build-in forex MTM loss of Rs 14 crore, as against a forex gain of Rs 200 crore in Q3FY21, on capitalised operating leases due to a marginal depreciation in rupee against the US dollar during Q4FY21,” said Ashish Shah, analyst at the brokerage.

Moreover, on the operational front, Shah projects IndiGo’s average seat kilometers (ASKM) and revenue passenger kilometer (RPKM) to decline by 18 per cent and 29.3 per cent year-on-year with load factor of 71.5 per cent, down from 82.8 per cent in Q4FY20.

The two metrics are used to gauge how much distance did passengers travel (RPKM) and the subsequent revenue generated from it (ASKM).

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Overall, revenue is pegged at Rs 6,145.6 crore while Ebitdar (earnings before interest, tax, depreciation, amortization, and rent) is seen at Rs 918.7 crore with Ebitdar margin of 13.6 per cent.

Edelweiss Securities
Analysts at this brokerage estimate the net loss at Rs 33.1 crore while revenue and Ebitdar are projected at Rs 6,102.4 crore and Rs 1,024.3 crore, respectively.

This would mean a 26.5 per cent YoY decline in revenue from Rs 8,299.1 crore but a 24.3 per cent expansion over Rs 4,910-crore revenue earned in Q3FY21. 

Ebitdar, meanwhile, would slip 7 per cent YoY but grow around 4 per cent QoQ from Rs 1,100.9 crore (Q4FY20) and Rs 987.1 crore (Q3FY21), respectively. 

"While the yield environment has remained strong, muted PLF will lead to decrease in revenue per available seat-kilometer (RASK). Moreover, a decline in fuel cost (YoY) will help offset impact of lower capacity," Jal Irani and Shubham Mittal of Edelweiss said.

Elara Capital
In one of the most optimistic estimates, Dixit and Alva of Elara believe the Gurugram-based airline may log a net profit of Rs 93.8 crore in Q4FY21. 

"The company’s passenger yield is expected to increase 4 per cent YoY due to a rise in airfare prices and improved passenger load factor of 73.5 per cent. However, we estimate passenger volume to decline by 29 per cent YoY in the quarter under review," they said.

Operationally, revenue and Ebitda are seen at Rs 5,881.8 crore and Rs 1,212 crore, respectively. 

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