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Investing.com - Kotak has reiterated its Add rating on InterGlobe Aviation Ltd. (INDIGO:IN) with a price target of INR5,700.00, despite concerns over recent mass flight cancellations.
The investment firm warns that the cancellations could slow Available Seat Kilometer (ASK) growth for IndiGo, potentially erode part of its cost advantage, and may involve significant penalties that could set a precedent for the industry.
Kotak draws parallels to Southwest Airlines’ December 2022 incident, suggesting IndiGo could face sharp earnings reductions in the near term, with the firm estimating a 26% cut in fiscal year 2026 earnings.
The research note indicates uncertainty about competitors’ ability to capitalize on IndiGo’s challenges, though it acknowledges the need for increased competition within India’s aviation sector.
Kotak has reduced its earnings estimates for fiscal years 2027 and 2028 by 8%, incorporating expectations of lower ASK growth and higher operational costs for the airline.
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