MOSL: INTERGLOBE AVIATION (Neutral)-Improved load factor/RASK-yield in-line
INTERGLOBE AVIATION: Improved load factor/RASK; yield in-line
(INDIGO IN, Mkt Cap USD8.2b, CMP INR1463, TP INR1410, 4% Downside, Neutral)
INDIGO reported Ind-AS 116-based quarterly results. Yield for the quarter was in line with our estimate at INR4.55, leading to 45% YOY increase in net sales at INR94.2b (our estimate: INR88.6b). EBITDAR was at INR31.7b (+207% YoY) due to the transaction impact of Ind-AS 116 – lease and supplementary expenses were replaced by depreciation (on ROU asset recognized) and finance charges (finance lease liability). Forex gain was at INR446m (v/s loss of INR2,461m in 1QFY19 and gain of INR105m in 4QFY19). PAT came in at INR12.0b (v/s our estimate: INR6.9b; gain of INR0.3b in 1QFY19 and INR5.9b in 4QFY19). Employee cost was higher by 70% YoY at INR11.1b owing to salary increments and new pilots hiring (currently under training).
Operational data:
- ASK increased 31% YoY to 23.3b. The company added ~18 new planes during the quarter and expects delivery of first leap of A320neo next year.
- INDIGO has been allotted ~30% of the 160 domestic departure slots of Jet Airways (Mumbai - 108 slots; Delhi - 52).
- RPK in 1QFY20 increased by 30% YoY at 20.7b, with RASK at INR4.04 - the highest since 1QFY16.
- Also, cargo revenue increased significantly as INDIGO has increased the range of its cargo products.
- Load factor was 88.8% (-100bp YoY, +300bp QoQ) v/s our estimate of 86.0%.
- Yield was strong and in line with our estimate at INR4.55 (+11% YoY, +10% QoQ), aided by highest booking in the 0-15 day window.
- Fuel cost was lower 11% YoY at INR1.36/ASK.
Interglobe Aviation Ltd. InterGlobe Aviation Limited, formerly InterGlobe Aviation Private Limited, is an India-based company engaged in operating passenger airline. The Company offers aviation, hospitality and travel related services. It operates through two geographic segments: Domestic, which includes air transportation within India, and International, which includes air transportation outside India. Its business lines include InterGlobe Air Transport, InterGlobe Aviation, InterGlobe Hotels, InterGlobe Technologies, InterGlobe Technology Quotient and InterGlobe Education. InterGlobe Technologies provides integrated information technology and business process outsourcing services. InterGlobe Technology Quotient distributes Travelport in India and Sri Lanka. It has four trademarks, namely, IndiGo Airways, IndiGo Airlines, IndiGo and IndiGo Air. It has around 96 aircrafts, and operates scheduled services to approximately 33 airports in India, with a maximum of around 593 domestic flights per day.
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