Goldman Sachs has downgraded InterGlobe Aviation to ‘neutral’ from ‘buy’ rating, and they have a target price of Rs 1,950 on the stock.
Now IndiGo has rallied, it has been the best performing stock globally in the last 18 months. The stock is up 68 percent versus its global peers, which are minus 15 percent on an average.
Now after this big move in the last 18 months, the stock is trading at 11.50 times of FY23 EV to EBITDA, which is a 20 percent premium to the one-year forward pre-COVID levels of 9.50 percent, so it is already trading at expensive valuations.
While it has a dominant position, there is no doubt about it, but there are multiple headwinds for IndiGo going forward. One of course is the rising crude price, there could be a possible return of Jet Airways, a new start-up Akash Airlines could be a headwind and of course, the sale of Air India as well.
So, on back of all this, the risk-reward seems unfavourable to Goldman Sachs and hence they have downgraded it from ‘buy’ to ‘neutral’ with a target price of Rs 1,950.
Watch the accompanying video of CNBC-TV18’s Nimesh Shah for more details.
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