IndiGo's stock is facing pressure from widespread flight cancellations. These disruptions are expected to affect revenue and profits in the coming quarter. Analysts suggest further stock drops are possible if the cancellations persist. Investors are advised to wait for clarity on the situation. The company's ability to restore operations will be key to its stock's future performance.

Analysts warn of up to 16% further downside for IndiGo amid operational turmoil

IndiGo Stock Faces Pressure Amid Widespread Flight Cancellations

IndiGo's stock is facing significant pressure due to widespread flight cancellations, which are expected to impact the company's revenue and profits in the coming quarter.

Recent Developments

IndiGo's shares have fallen over 7% in the previous five trading sessions.
The stock has dropped 2.4% to close at ₹5,461.50 on Thursday.
Analysts suggest further stock declines of as much as 16% are possible if the mass cancellations continue.

Expert Analysis

Dharmesh Kant, head of research at Cholamandalam Securities, said, "The flight disruptions dragged IndiGo's shares lower, and these flight cancellations are expected to impact IndiGo's revenue and profits in the next quarter as the issue is not likely to subside in the near term."

Ambareesh Baliga, an independent analyst, added, "Indigo seems to be in a tough spot, though they could have planned better as the crew limitation order was not a sudden development, unlike the A320 software glitch. The impact could also spill over to Q4 as the issue is not likely to be resolved soon."

Short-term Impact

The decline in IndiGo's shares is primarily due to flight disruptions, which analysts said were exacerbated by the implementation of time limits for the crew and the grounding of the A320 fleet due to software glitches.
Analysts say further declines to ₹4,600-4,800 cannot be ruled out.

Investor Advice

"Investors can avoid the stock currently until there is clarity on the issue, but traders looking to take a punt can buy at further declines as the structural story remains strong," said Kant.

With the issue likely to drag on, analysts advise traders to buy on declines but investors should avoid the stock for now.

Market Impact

IndiGo's shares have dropped 3.1% in the last month, while the benchmark Nifty has risen 1.7% during the same period.
The weak rupee could drive up fuel and lease costs.