InterGlobe Aviation Limited — Q3 FY25 earnings call

Call held 24 Jan 2025

Management summary

IndiGo delivered an exceptional Q3 FY25 driven by festive season demand surge, with record passengers and 17.4% profit margin ex-forex. The headline profit was impacted by INR 14 billion unrealized forex loss from 2% rupee depreciation on ~$8 billion net dollar exposure. Management guided Q4 capacity growth at ~20% YoY (due to low base) and early single-digit PRASK moderation YoY. IndiGoStretch business class launched on Delhi-Mumbai and Delhi-Bangalore with positive initial reception.

Highlights

  • Total income of INR 230 billion (+15% YoY) against capacity growth of 12%; net profit of INR 24.5 billion (11% margin) including INR 14 billion forex MTM loss

  • Excluding forex, profit after tax was INR 38.5 billion (17.4% margin), up 26% YoY from INR 30.5 billion

  • Record 31 million passengers served in the quarter (+13% YoY); highest ever in IndiGo's history

  • Load factors above 90% for most of November and December; touched 10 million monthly passengers in November

  • EBITDAR of INR 61 billion vs INR 55 billion in Q3 FY24; RASK at INR 5.44 (+2% YoY)

  • CASK ex-fuel ex-forex at INR 2.90, stable sequentially but +10% YoY due to AOG costs and contractual escalations

  • Fleet reached 437 aircraft with 33 inductions in Q3; AOGs declined from 70s to 60s, expected to reach 40s by FY26 start

  • Free cash of INR 289 billion; acquired 3 ATR aircraft and 10 finance lease aircraft as cash utilization

Concerns

  • Large unrealized forex losses from rupee depreciation on $8 billion net USD exposure

Key financials

  1. Total Income ₹23,000 Cr +15%YoY
  2. Net Profit (reported) ₹2,450 Cr -18.3%YoY
  3. Net Profit (ex-forex) ₹3,850 Cr +26%YoY
  4. Net Profit Margin (ex-forex) 17.4%
  5. EBITDAR ₹6,100 Cr +10.9%YoY
  6. RASK ₹5.44 +2%YoY
  7. Passenger Unit Revenue (PRASK) ₹4.72 0%YoY
  8. Yield ₹5.43 -1%YoY
  9. Load Factor 87%
  10. CASK ex-fuel ex-forex ₹2.9 +10%YoY
  11. Forex Loss (unrealized) ₹1,400 Cr
  12. Free Cash ₹28,900 Cr
  13. Fleet Size 437 aircraft

What they filed

Q1 FY27: revenue up 19.9%, net profit down 117.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue16,970 22,111 22,152 20,496 18,555 +9%23,472 +6%22,438 +1%24,584 +20%
EBITDA1,618 5,160 6,082 5,205 545 −66%5,353 +4%741 −88%3,211 −38%
Net profit-989 2,442 3,073 2,161 -2,614 −164%613 −75%-2,662 −187%-382 −118%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Network
    28% International ASK Share90 Domestic Destinations38 International Destinations2,200 Daily Peak Flights

Guidance & targets

Capacity

  • Q4 FY25 ASK Growth Capacity · Q4 FY25 · High confidence ~20% YoY
    for the fourth quarter of this financial year we are expecting to add capacity of around 20 percent as compared to the same period last year

    — Gaurav Negi

  • FY25 ASK Growth Capacity · FY25 · High confidence Early double digits
    we remain firm on our full year guidance of early double digits capacity addition

    — Gaurav Negi

Revenue

  • Q4 FY25 PRASK Revenue · Q4 FY25 · Medium confidence Early single digit YoY moderation
    we are estimating an early single digit moderation in unit passenger revenue as compared to the higher base of last year

    — Gaurav Negi

Fleet

  • AOG Count by FY26 Start Fleet · Q1 FY26 · High confidence 40s

    From 60s currently today

    we will begin the next financial year with the groundings in the range of 40s and expect the number to further go down as the year progresses

    — Gaurav Negi

Product

  • Stretch Aircraft Count Product · CY2025 · High confidence 45 aircraft on 10+ metro routes by end CY25
    In the year 2025, we will launch Stretch on 10 more metro-to-metro routes across the country with a total of 45 aircraft

    — Pieter Elbers

Risks & concerns

  • Large unrealized forex losses from rupee depreciation on $8 billion net USD exposure

    high

    INR 14 billion MTM forex loss in Q3 alone from 2% rupee depreciation. Hedging covers only 60-70% of 12-month cash flows; balance sheet exposure extends 8-10 years.

    Both acknowledged

  • CASK ex-fuel ex-forex up 10% YoY driven by AOG-related costs

    medium

    Grounding-related costs including damp leases and contractual escalations drove unit cost inflation. Expected to moderate as AOGs decline but timing uncertain.

    Analyst acknowledged

  • International yield pressure from intensifying competition

    medium

    Higher degree of yield moderation on international routes due to capacity addition intensity and foreign airlines increasing India operations. Domestic yields more resilient.

    Management acknowledged

  • Execution risk on IndiGoStretch business class rollout

    low

    Product just 2 months old on limited routes. Revenue impact too early to quantify. Positive anecdotal reception but no load factor data shared.

    Analyst downplayed

Areas of evasion (3)

  • Exact AOG count within 60s range
  • Precise spread impact of AOG resolution
  • Stretch load factors

Q&A highlights

1 direct
Forex hedging strategy and mark-to-market exposure Direct
We are hedging all our positions for the next 12 months between a natural hedge and the forward instruments that we are taking up to 60%-70%

Net USD exposure of ~$8 billion means every 1 rupee move = INR 800 crore MTM loss; hedging only covers 12-month cash flows leaving long-term balance sheet exposed

Asked by Binay Singh (Morgan Stanley)

AOG impact on spreads and wet lease strategy Partial
It is going to be in the single digits in terms of spreads... surely, it will have a positive impact on the spread

AOG resolution expected to improve RASK-CASK spread by single digit points - significant margin tailwind as groundings decline from 60s to 40s

Asked by Binay Singh (Morgan Stanley)

IndiGoStretch business class initial performance and outlook Partial
Having 40-45 planes in this configuration on a total of 400 planes gives you a bit of an indication on the magnitude of it

~10% of fleet will have Stretch by end CY25; positive market reception but too early for financial quantification of premium revenue uplift

Asked by Ansuman Deb (ICICI Securities)

2 min read 5 chapters

Detailed narrative

Record Q3 Fueled by Festive Season Demand Surge

IndiGo served a record 31 million passengers in Q3, up 13% YoY, with load factors above 90% for most of November and December. Total income grew 15% to INR 230 billion. The domestic market rebounded strongly from H1 softness caused by elections and heatwave, with industry achieving historic milestone of 5 lakh daily domestic passengers.

Forex Headwinds Mask Strong Operational Performance

Reported net profit of INR 2,450 crores was depressed by INR 1,400 crores unrealized forex loss from 2% rupee depreciation. Excluding forex, profit grew 26% YoY to INR 3,850 crores at 17.4% margin. Net USD exposure stands at ~$8 billion across lease liabilities and maintenance obligations. Hedging strategy covers 60-70% of 12-month cash outflows, with INR 591 million gain recorded.

AOG Situation Improving but Cost Overhang Persists

AOGs declined from 70s to 60s and expected to reach 40s by FY26 start. However, CASK ex-fuel ex-forex remained elevated at INR 2.90 (+10% YoY) due to damp lease costs and contractual escalations. Damp lease rates moderated from summer to winter seasons. Management estimates AOG resolution will improve RASK-CASK spread by single-digit points.

Strategic Expansion: Stretch Product and International Growth

IndiGoStretch launched on Delhi-Mumbai (November) and Delhi-Bangalore (January) with positive market reception. Plan to reach 45 Stretch-configured aircraft across 10+ metro routes by end CY2025. International network expanded to 38 destinations with 28% ASK share. Management exploring wet-leased widebody for earlier long-haul entry, subject to regulatory approval.

Q4 Outlook: Strong Capacity Growth Against Low Base

Q4 FY25 capacity guided at ~20% YoY growth, primarily due to low base from last year's sudden groundings. PRASK expected to moderate early single digits YoY against high base when industry had supply constraints. Full year FY25 capacity guidance of early double-digit growth reaffirmed. January demand trends described as very strong.

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