Shares of InterGlobe Aviation ran into a rough weather today, but came out of it quickly even as many brokerages cut their target price on the stock.
The brokerages slashed the target price following a big loss the airline reported for the September quarter.
At 9.28 am, the stock was 0.52 per cent higher at Rs 821.35 on the BSE, but not before falling 5.4 per cent to hit a low of Rs 773 in early session.
The airline on Wednesday posted a loss of Rs 652.10 crore for the quarter ended September 30, due to higher fuel prices and currency depreciation. The company had posted a net profit of Rs 551.60 crore in the corresponding quarter last year.
"Crude oil remains volatile. We have seen a sharp reduction in the past few days. If that persists, lower fuel cost (40 per cent of total cost) would be beneficial. However, a rising competitive intensity will weigh on profitability over FY19-20. Thus, we remain cautious on the stock," said Motilal Oswal Securities.
The firms target for the stock at Rs 785 is 4 per cent lower than Wednesdays closing price.
With resolution of A320Neo delivery issues, the management has increased FY19 ASKM growth guidance to 30 per cent from 25 per cent, said Edelweiss Securities.
“However, pricing pressure continues to persist, especially in the highly-profitable business segment (less than 15 days). Hence, we are revising down FY19-FY20E Ebitdar by 25 per cent and 10 per cent, respectively. lowering our target to Rs 1,073 from Rs 1,153 earlier,” the brokerage said.
JP Morgan has maintained neutral stance on the stock, with a target of Rs 900. Price war drove higher-than-expected loss in Q2, it said.
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