IndiGo’s Q4 FY25 results have reinforced investor optimism, prompting ICICI Securities to maintain its BUY call on InterGlobe Aviation with an upgraded target price of Rs. 6,377 (previously Rs. 5,265). The call is underpinned by the airline’s ability to sustain strong operating spreads, capitalize on lower fuel costs, and advance its dual strategies of premiumisation and international expansion. Despite geopolitical disruptions in May, IndiGo delivered its best-ever Q4, highlighting its operational resilience, network agility, and market dominance. The stock now offers a potential upside of 17% from current levels.

Strong Q4 FY25 Sets New Benchmarks for IndiGo

IndiGo posted a stellar PAT of Rs. 30.7 billion in Q4 FY25, up 61.9% year-over-year, supported by festive and wedding season travel and the Maha Kumbh surge. Adjusted PAT stood at Rs. 29.3 billion, reflecting robust passenger traction and operational efficiency. Total operating income for the quarter rose 24.3% YoY to Rs. 2,21,519 million, while EBITDA surged by 52.5% to Rs. 60,894 million, pushing EBITDA margins to 27.5%.

ASK (Available Seat Kilometers) grew 21% YoY in Q4 FY25, and passenger load factor (PLF) remained strong at 87.4%. IndiGo carried 31.9 million passengers during the quarter—a 19.5% jump over Q4 FY24—despite short-term disruptions.

Premiumisation and Internationalisation Strategies Take Flight

IndiGo’s long-haul international ambitions received a boost with the damp lease of six Boeing 787 aircraft from Norse Atlantic Airways. These aircraft will serve new destinations in Europe, including Amsterdam and Manchester, starting July 2025. The airline also announced its 41st international destination—Fujairah in the UAE—marking a steady rise in global connectivity.

The ‘IndiGo Stretch’ business class rollout continues, now featured on six routes with 16 aircraft, and is expected to expand to 40 aircraft by the end of CY25. Early traction, especially on high-density routes like Delhi–Mumbai, indicates potential for further premium revenue uplift.

Temporary Demand Softness from Geopolitical Turbulence

In May 2025, geopolitical tensions forced a suspension of operations at 11 northern Indian airports, affecting domestic traffic and leading to the cancellation of nearly 170 daily IndiGo flights. Despite the disruption, IndiGo maintained more than 2,050 daily flights with strong load factors (~83%).

Bookings dipped temporarily, but recent trends signal a recovery. Management noted a decline in cancellations and resumption of booking momentum after mid-May, aligning with government passenger data.

Minimal Impact from Airspace Closures

Airspace restrictions from April 24, 2025, led IndiGo to suspend operations to Almaty and Tashkent. However, the rerouting of 19 international sectors with marginal increases in flight times had limited operational impact, thanks to IndiGo’s robust network scale of over 2,000 daily flights.

The airline’s agility in reconfiguring routes and minimizing disruption ensured that core international expansion remained unaffected.

Financials Reflect Resilience and Robust Cash Generation

Q4 FY25 EBITDA margin improved to 27.5%, with EBIT rising 58.3% YoY to Rs. 45,436 million. The operating spread (RASK minus CASK) was Rs. 0.50 in Q4, up from Rs. 0.38 in FY25 overall.

Free cash flow soared to Rs. 257.4 billion for FY25, with total cash holdings at Rs. 482 billion, including Rs. 332 billion in free cash. Total debt (including lease liabilities) stood at Rs. 668 billion in Q4 FY25.

Guidance and Valuation Upside Remain Strong

ICICI Securities projects FY27 earnings per share (EPS) of Rs. 253 and values IndiGo at 25x forward P/E. This valuation yields a 12-month target price of Rs. 6,377, implying a 17% upside from the current market price of Rs. 5,462.

While risks such as fuel volatility and geopolitical events persist, the investment case is underpinned by structural tailwinds—fleet expansion, higher international penetration, and premium offerings.

Key Metrics and Forecasts

Final Word: IndiGo’s Moat Strengthens Amid Market Volatility

IndiGo remains the undisputed leader in Indian aviation, with a domestic market share of 64.1% and international market share at 43.3% as of April 2025. Its operational scale, high aircraft utilization, and disciplined cost control give it an edge over competitors.

With premium offerings gaining traction and international expansion accelerating, IndiGo is positioning itself not just as a budget carrier—but as India’s flagbearer for global aviation leadership.