Indigo Q1 results released!

Last updated: 29 Jul, 2020 | 02:24 pm

Indigo Q1 results released!
  • Muted numbers: With the past quarter nearly washed out for the corporates and aviation being one of the most affected sectors, Indigo has reported a humongous loss of INR 28,443 million.The company had a net profit of INR 12,031 million in the same period last year. Revenue from operations was at INR 7,667 million for the quarter, a decrease of 91.9% compared to the same period last year. to a net profit of INR 12,031 million in the same period last year. Without the flights running, costs were not sufficiently covered and the company massively under performed on different operational metrics. Load factor which essentially measures capacity utilization was down by 27.6 basis points. Revenue Passenger Km. was down by 94% whereas CASK which is a measure of cost was up by 412%.
  • Network and Fleet: As of June 30, India’s largest airline by passenger and fleet size had a fleet of 274 aircraft, a net increase of 12 aircraft in the quarter. For Q1FY21 the company operated a peak of 418 daily flights including charter.
  • Management commentary: Indigo’s CEO said that 'The aviation industry is going through a crisis of survival and therefore, our cash balance remains our number one priority. However, we also recognize that major disruptions offer companies opportunities for improvement in product, customer preference, costs, and employee engagement. We have built a strong team that is working on multiple fronts to ensure that we emerge from this crisis stronger than ever.'
  • Cash and debt position: Indigo had a total cash balance of INR 184,498 million comprising INR 75,276 million of free cash and INR 109,222 million of restricted cash. The capitalized operating lease liability was INR 211,779 million. The total debt (including the capitalized operating lease liability) was INR 235,516 million.
  • Future Capacity Growth:  Management expects Q2 fiscal 2021 ASKs(Available Seat Kilometer) to be around 40% of our Q2 fiscal 2020 ASKs. 

The effect of the coronavirus on the aviation sector is not expected to fade away anytime soon, changes in business travel patterns, fall in tourism, etc are expected to have negative effects on the aviation sector. Also in absence of any direct bailout or stimulus package by the government for the sector, the airlines are in for a tough time in the future.

Our VGQM model has a SELL rating on the stock.

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