29 July 2020
1QFY21 Results Update | Sector: Aviation
Indigo
Neutral
Estimate change
TP change
Rating change
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CMP: INR910
TP: INR1,030 (+13%)
Aviation space remains preposterous…
…however, INDIGO provides ample clarity on the path ahead
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
Financials & Valuations (INR b)
Y/E March
2020 2021E
Sales
357.6 135.8
EBITDAR
42.3 -11.9
NP
-5.6 -62.7
EPS (INR)
-14.5 -163.2
EPS Gr. (%)
NM 1026.7
BV/Sh (INR)
152.5 -10.7
Ratios
Net D:E
0.9 -24.3
RoE (%)
-8.7 -230.2
RoCE (%)
8.0 -22.5
Payout (%)
0.0
0.0
Valuations
P/E (x)
-62.7
-5.6
P/BV (x)
6.0 -84.8
Adj.EV/EBITDAR(x)
10.3 -39.0
Div. Yield (%)
0.0
0.0
FCF Yield (%)
-21.8 -12.6
INDIGO IN
384
350.1 / 4.7
1911 / 765
-19/-30/-43
25.1
2553
2022E
298.3
88.3
24.7
64.4
-139.4
45.9
-0.4
365.5
24.3
12.0
14.1
19.8
4.2
0.7
32.9
INDIGO reported higher yield than est. at INR4.53 (+11.1% YoY) v/s our est. of
INR3.7. Yield was stronger on the higher base of last year (a quarter of the Jet
demise), aided by fare bands imposed by the Ministry of Civil Aviation (MoCA).
However, the company is of the view that fare caps on domestic travel should be
removed as early as possible.
INDIGO had cash burn of INR400m amid the crisis, which reduced to INR300m as
of 30
th
June – most of the reduction coming out of employee costs. The company
has undertaken cost-reduction initiatives for leasing, payroll, and other costs.
Considering the above-mentioned efforts are realized and cash burn per quarter
decreases along with increase in capacity utilization (ASK guidance for 2Q/3QFY21
is at 40%/50–70% of previous year’s respective quarters), we have built-in loss of
INR62.7b in FY21, with breakeven expected in 2QFY22.
INDIGO is also undertaking various pre-emptive measures to focus and strengthen
each of the business verticals to come out stronger from the current crisis. It is
targeting additional liquidity of INR50–60b through supplementary rental
adjustments. INDIGO was able to already tap ~35% of the earlier targeted INR30–
40b in 1QFY21.
However, we continue to believe that in the long run, Aviation would witness
continued headwinds in terms of surplus capacity, the lack of confidence among
passengers to resume travel, and demand in business travel.
In the current state of uncertainty in the industry, we remain Neutral on the stock.
Cash burn of INR300m per day to reduce further
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Jun-20 Mar-20 Jun-19
74.9
74.9
74.9
7.6
9.2
5.2
14.8
13.6
15.6
2.8
2.4
4.4
FII Includes depository receipts
In 1QFY21, ASK was much below our est. at 2.1b (-91% YoY and QoQ), with
PLF of 61.9%.
Domestic flights were permitted operations starting 25
th
May,
and the company operated only cargo flights till then during the quarter.
RPK came in at 1.3b (-94% YoY and QoQ);
thus, revenue stood at INR7.7b (-
92% YoY). RASK was lower YoY, but marginally higher QoQ, led by huge
pent-up demand for passenger mobility.
Although, the demand trend has
weakened in the last few days due to an increase in the no. of positive
COVID-19 cases in the country.
EBITDAR came in at a loss of INR15.4b (v/s est. loss of INR7.8b). Reported
PAT stood at a loss of INR28.4b (v/s est. loss of INR16.0b; gains of INR12.0b
in 1QFY20, loss of INR8.7 in 4QFY20).
INDIGO resumed services to 56 domestic destinations and served 20
international destinations via charter operations. INDIGO started with ~200
flights on average per day, which now stands ~400 flights per day.
The company added 12 aircraft to its fleet (8 A320neos and 4 A321neos)
during the quarter, totaling 274 aircraft (A320ceos remain same at 123).
INDIGO would return older CEO aircrafts as per its earlier schedules, i.e.,
replacing all of them by Dec’22.
Sarfraz Bhimani - Research Analyst
(Sarfraz.Bhimani@MotilalOswal.com)
Swarnendu Bhushan- Research Analyst
(Swarnendu.Bhushan@MotilalOswal.com)
3 September
research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P
1
Motilal Oswal
2019
Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
 Motilal Oswal Financial Services
Indigo
Valuation and view
Cash at the end of June’20 stands at INR184.5b (INR75.3b of free cash and
INR109.2b of restricted cash).
Despite higher cash burn of ~INR300m per day,
the company was successful in its initiatives to create additional liquidity and
thus realized ~35% of its earlier target of INR30–40b, leading to free cash
reduction of ~INR14b (v/s reported loss of INR28.4b).
The company is also optimizing its working capital management, along with
various other cost-control initiatives.
As per a recent
study conducted by IATA,
global passenger traffic (RPK) is not
expected to return to pre-COVID-19 levels until 2024 as international travel is
delayed. Also, there has been a huge change in the demand dynamics for
corporate travel, while confidence among (leisure) flyers remains weak owing to
slow virus contamination.
The fare bands were recently further extended to the end of Nov’20, and we
believe that (in line with the company’s ideology), the permanent enforcement
of fare bands could be a huge dampener on the Aviation industry as a whole,
weakening sentiment for the regulated Aviation market.
We continue to believe that long-term demand and stability in the sector
remain key challenges; thus, we remain cautious on the stock.
We revise our
forecast EPS down to -INR163/+INR64 for FY21/FY22 (from -INR169/+INR77).
The stock trades at 14.1x FY22 EPS of INR64.4 and 4.2x FY22 adj. EV/EBITDAR.
We value the company at 16x FY22 EPS of INR66.4 to arrive at TP of INR1,030.
Maintain Neutral.
(INR Million)
FY21E
FY21
1QE
1,35,838 20,262
-62.0
-78.5
-11,873 -7,786
-8.7
-38.4
2,160
233
-14,033 -8,019
-10.3
-39.6
43,414 10,282
20,703
4,778
15,450
4,066
-62,701 -19,013
0.0
15.6
-62,701 -16,047
-163.1
-41.7
2,521.3 -233.4
Quarterly performance
Y/E March
Net Sales
YoY Change (%)
EBITDAR
Margins (%)
Net Rentals
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT
Rate (%)
Reported PAT
EPS
YoY Change (%)
E: MOFSL Estimates
1Q
94,201
44.7
26,564
28.2
1,288
25,276
26.8
9,009
4,842
3,669
15,094
20.3
12,031
31.3
4,225.4
FY20
FY21
FY20
2Q
3Q
4Q
1Q
2Q
3Q
4Q
81,052 99,317 82,991 7,667 24,587 47,281 56,303 3,57,560
31.0
25.5
5.3
-91.9
-69.7
-52.4
-32.2
25.5
968 18,042
-84 -15,376 -6,970 4,798 5,676
45,489
1.2
18.2
-0.1 -200.5
-28.4
10.1
10.1
12.7
1,110
1,343
1,226
757
484
774
145
4,967
-142 16,699 -1,310 -16,134 -7,454 4,024 5,531
40,523
-0.2
16.8
-1.6 -210.4
-30.3
8.5
9.8
11.3
10,287 10,377 10,066 10,966 10,966 10,966 10,518 39,739
4,235
4,805
4,877
5,097
5,097
5,097
5,411 18,759
4,346
3,986
3,356
3,771
3,771
3,771
4,137 15,357
-10,318 5,504 -12,898 -28,426 -19,747 -8,268 -6,261
-2,618
-2.9
10.9
32.5
-0.1
0.0
0.0
0.3
8.6
-10,620 4,905 -8,708 -28,443 -19,747 -8,268 -6,243
-2,392
-27.6
12.8
-22.7
-74.0
-51.4
-21.5
-16.2
-6.2
62.8
157.0 -247.7 -336.4
85.9 -268.6
-28.3
-253.3
29 July 2020
2
 Motilal Oswal Financial Services
Indigo
Company’s plan for the future
Company is undertaking various pre-emptive measures to focus and strengthen
each of the business verticals to come out stronger from the current crisis
Revenue growth – from repatriation and charter flights, along with cargo
INDIGO conducted ~290 repatriation flights for ~44,000 passengers and carried
395 tonnes of medical cargo. The company intends to continue with its charter
flights and repatriation flights
as a profit avenue until international operations
are resumed.
Also, INDIGO has converted 10 aircraft to all-cargo airplanes and is now looking
at the Cargo business as a new full vertical.
ASK guidance for 2Q/3QFY21 is at 40%/50–70% of previous year’s respective
quarters. All of the older CEO aircrafts with faulty PW engines are expected to
be refurbished by the end of August’20.
ASK guidance is subject to support from the government framework, most
importantly to current headwinds faced due to various state-led travel
advisories and the imposition/extension of further lockdowns.
Liquidity – additional liquidity of INR50–60b targeted
Supplementary rental adjustments such as moratorium for payment of aircraft
leases (to aid ~INR20b), sale and leaseback, etc., are expected to yield liquidity
of INR30–40b.
Also, ~INR20b of liquidity is expected by putting up assets that the company
owns on sale and the lease-back model.
Supplementary rentals are a variable for the company, while other maintenance
costs are fixed in nature.
Cost reduction – various initiatives are taken to reduce fixed cost
Leasing cost –
INDIGO would honor its long-term commitments with lessors,
reflecting on its long-run planning. Thus, the provisioning of rental expenses is
likely to continue at similar levels (~INR2.3b recorded in 1QFY21). Although,
expect supplementary rentals (variable in nature) to come down further as
capacity utilization returns to normal.
Payroll costs –
Salary reduction, leave without pay, trimming of the workforce
by 10%, etc., would further lead to a reduction in employee cost. Expect
employee cost to be lower by 30% v/s pre-COVID-19 levels by the end of FY21
(v/s the earlier target of a 25% reduction).
Other costs
such as non-aircraft rentals, IT costs, and maintenance costs, which
account for 20–25% of the total cost, are expected reduce by 10–15%.
29 July 2020
3
 Motilal Oswal Financial Services
Indigo
Exhibit 1: IndiGo – Key assumptions
Y/E March
Fleet and capacity
ASK (millions)
YoY (%)
Load Factor
RPK (millions)
YoY (%)
Revenue Calculation
Ticket Revenue (INRm)
Yield (INR/RPK)
Ancillary revenues
Total Revenue (INR m)
Fuel Cost
Exchange rate (INR/USD)
Brent Price (USD/bbl)
ATF Prices (INR/ltr)
YoY (%)
Aircraft fuel expenses (INR m)
FY15
35,327
18%
80%
28,177
22%
1,22,939
4.4
16,314
1,39,253
61
85
68
-10%
57,485
FY16
42,826
21%
84%
35,968
28%
1,40,626
3.9
20,773
1,61,399
65
47
48
-30%
47,793
FY17
54,583
27%
85%
46,288
29%
1,61,971
3.5
23,834
1,85,805
67
49
50
4%
63,415
FY18
63,510
16%
87%
55,524
20%
1,99,433
3.6
30,776
2,30,209
64
57
55
10%
77,601
FY19
81,016
28%
86%
69,787
26%
2,51,359
3.6
33,609
2,84,968
70
70
68
23%
1,19,428
FY20
96,300
19%
86%
82,600
18%
3,14,682
3.8
42,878
3,57,560
72
64
65
-4%
1,26,316
FY21E
43,205
-55%
60%
25,923
-69%
1,03,693
4.0
32,145
1,35,838
FY22E
85,798
99%
75%
64,349
148%
2,44,525
3.8
53,796
2,98,321
75
76
40
50
43
51
-34%
18%
36,853
61,205
Source: Company, MOFSL
Valuation and view
ASK growth
INDIGO has given guidance that ASK for 2QFY21 would be ~ 40% of 2QFY20
and for 3QFY21 it would be 50–70% of 3QFY20 levels, given that the regulatory
framework supports the capacity.
In light of the same, we have built-in the following assumptions for the next
three quarters of the year:
•
2QFY21E loss of ~INR19.8b – ASK of ~9.7b (at 40% YoY) with PLF at ~50%
•
3QFY21E loss of ~INR8.3b – ASK of ~15.5b (at 60% YoY), with PLF at ~60%
•
4QFY21E loss of ~INR6.3b – ASK of ~16b (at 70% YoY), with PLF at ~65%
For the aforementioned model assumptions, the easing of individual state
restrictions has a very crucial role to play.
Although, the demand trend has
weakened in the last few days due to an increase in the no. of positive COVID-
19 cases in the country.
Thus, we have built-in loss of INR62.7b in FY21, with breakeven expected in
2QFY22. INDIGO plans to replace CEO aircrafts gradually, as earlier scheduled,
by the end of Dec’22; hence we build ASK of 85.8b for FY22 (-11% to FY20
levels).
We have built-in PLF of 50%/60%/65% in 2Q/3Q/4Q FY21, resulting in average
PLF of 60% for FY21, leading to RPK of 25.9b (-69% YoY) in FY21.
As per a recent
study conducted by IATA,
global passenger traffic (RPK) is not
expected to return to pre-COVID-19 levels until 2024 as international travel is
delayed. Also, there has been a huge change in the demand dynamics for
corporate travel, while confidence among (leisure) flyers remains weak owing to
slow virus contamination.
For FY22E, we assume sentiment would improve from 3QFY22, resulting in the
normalization of PLF at ~75% (although, expected PLF remains low at 75% for
the full-year FY22 v/s average PLF of ~86% over FY16–20).
Thus, based on our
assumptions, RPK for FY22 is -22% to FY20 levels at ~64.3b (unchanged).
RPK growth
29 July 2020
4
 Motilal Oswal Financial Services
Indigo
Yield
According to our analysis of the announced (temporary fare bands), airline fares
YTD have a lower floor and cap than prescribed by MoCA.
INDIGO’s yield in 1QFY21 was stronger at 11% YoY on the higher base of last
year (a quarter of the Jet demise), aided by these fare bands.
However, the
company is of the view that fare caps on domestic travel should be removed
as early as possible.
In line with the same, we model-in our FY21/FY22 yield estimates at INR4.0
(from INR3.8 earlier) and INR3.8 (v/s INR3.8 in FY20), assuming that the fare
bands are removed going forward into the next year.
To note, the fare bands were recently further extended till the end of Nov’20,
and the permanent enforcement of fare bands could be a huge dampener on
the Aviation industry as a whole, weakening sentiment for the regulated
Aviation market.
Crude
We have built-in a crude price forecast of USD40/bbl / USD50/bbl for
FY21/FY22.
INDIGO’s fuel cost constitutes ~35% of the total cost (in FY20), and according to
our EPS sensitivity, aircraft fuel savings of even 10% would translate into an EPS
change of ~14% for INDIGO in FY22.
Nevertheless, the company’s profitability would be more vulnerable in the
short-to-medium term as prices have climbed up the trough with the lifting of
lockdowns by various countries across the globe.
International jet fuel (ATF) cracks, which reached negative USD10/bbl (the
lowest ever), were also seen improving as airlines across the globe resumed
operations. However, normalization in ATF cracks to its long-term average of
>USD10/bbl remains farfetched due to the huge demand destruction in the
Aviation space globally.
Building on all of the aforementioned factors, we continue to believe long-term
demand and stability in the sector remain key challenges; thus, we remain
cautious on the stock. We revise our forecast EPS down to -INR163/+INR64 for
FY21/FY22 (from -INR169/+INR77).
We value the company at 16x FY22 EPS of INR64.4 to arrive at TP of INR1,030.
Maintain Neutral.
Our estimates are highly sensitive to: a) ticket yield, b) PLF, and c) crude price
assumption; material change to any of these would impact our estimates.
Countries and businesses that depend on Travel and Tourism are trying to
revive
demand
with brand-affiliated marketing and other initiatives.
Also,
airline companies
are trying to instill confidence in passengers by making
them feel safe and so forth.
29 July 2020
5
 Motilal Oswal Financial Services
Indigo
Key exhibits
Exhibit 2: Total ASKs (billions) stood at 2.1b…
Exhibit 3: …with YoY decrease at 91% in 1QFY21
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 4: Total RPKs (billions) stood at 1.3b…
Exhibit 5: … with YoY decrease at 93.7% in 1QFY21
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 6: RASK stood to INR3.65 (-10% YoY) in 1QFY21…
Exhibit 7: … while CASK increased to INR17.19
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 8: Load factor stood at 61.9%
Exhibit 9: Fuel cost stood at INR0.63 in 1QFY21
Source: Company, MOFSL
Source: Company, MOFSL
29 July 2020
6
 Motilal Oswal Financial Services
Indigo
Financials and Valuation
Standalone - Income Statement
Y/E March
Total Income from Operations
YoY Chg (%)
EBITDAR
Margin (%)
Aircraft & Engine Lease Rentals
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
Reported PAT
Change (%)
Margin (%)
FY15
1,39,253
25.3
38,219
27.4
19,522
18,697
13.4
3,022
15,675
1,155
3,946
13,078
175.6
9.4
FY16
1,61,399
15.9
56,176
34.8
26,122
30,055
18.6
5,031
25,024
1,349
4,614
19,897
52.1
12.3
FY17
1,85,805
15.1
52,687
28.4
31,254
21,433
11.5
4,573
16,861
3,308
7,891
16,592
-16.6
8.9
FY18
2,30,209
23.9
65,667
28.5
36,102
29,565
12.8
4,369
25,196
3,398
9,469
22,424
35.1
9.7
FY19
2,84,968
23.8
47,940
16.8
49,994
-2,055
-0.7
7,596
-9,651
5,090
13,248
1,560
-93.0
0.5
FY20
3,57,560
25.5
42,270
11.8
4,967
37,303
10.4
39,739
-2,436
18,759
15,357
-5,568
-457.0
-1.6
FY21E
1,35,838
-62.0
-11,911
-8.8
2,160
-14,072
-10.4
43,414
-57,486
20,703
15,450
-62,740
1,026.7
-46.2
(INR Million)
FY22E
2,98,321
119.6
88,301
29.6
4,290
84,011
28.2
45,823
38,188
20,767
15,644
24,742
-139.4
8.3
Standalone - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Deferred Tax Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Net Current Assets
Appl. of Funds
E: MOFSL Estimates
FY15
344
3,863
4,207
4,091
35,884
44,182
56,715
7,955
48,760
5
5,168
53,750
1,306
1,046
19,994
31,405
63,500
4,755
56,694
-9,751
44,182
FY16
3,604
23,628
27,232
1,468
30,071
58,770
53,251
5,777
47,474
237
9,862
68,614
763
1,571
37,187
29,093
67,417
7,412
58,575
1,197
58,770
FY17
3,615
34,177
37,792
1,618
23,957
63,367
46,432
8,493
37,938
233
37,134
76,792
1,632
1,587
46,325
27,248
88,730
7,746
79,093
-11,938
63,367
FY18
3,844
66,930
70,774
3,695
22,414
96,883
57,906
12,862
45,043
294
63,440
1,02,516
1,832
2,263
65,806
32,614
1,14,410
10,002
1,01,407
-11,894
96,884
FY19
3,844
65,604
69,448
644
21,937
92,029
77,078
20,458
56,620
220
65,167
1,28,110
2,114
3,625
86,064
36,307
1,58,089
14,552
1,39,164
-29,979
92,029
FY20
3,848
54,776
58,624
0
1,59,257
2,17,881
2,27,979
60,197
1,67,782
1,293
94,994
1,56,416
2,861
2,596
1,08,294
42,665
2,02,603
15,655
1,67,465
-46,187
2,17,881
FY21E
3,848
-7,963
-4,115
0
1,59,257
1,55,142
2,29,013
1,03,611
1,25,402
259
94,994
77,672
1,341
986
59,136
16,209
1,43,184
7,336
1,35,848
-65,512
1,55,142
(INR Million)
FY22E
3,848
13,806
17,654
0
1,59,257
1,76,911
2,29,220
1,49,435
79,785
52
94,994
2,05,560
1,906
2,166
1,65,892
35,596
2,03,480
10,428
1,91,565
2,081
1,76,911
29 July 2020
7
 Motilal Oswal Financial Services
Indigo
Financials and Valuation
Ratios
Y/E March
EPS
Cash EPS
BV/Share
DPS
Payout incl. tax (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
Adj. EV/EBITDAR
EV/EBITDA
Dividend Yield (%)
FCF Yield (%)
Return Ratios (%)
RoE
RoCE
Working Capital Ratios
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Working Cap. Turnover (Days)
Leverage Ratio (x)
Net Debt / Equity
FY15
34.0
41.9
10.9
28.1
99.2
26.7
21.7
82.9
2.6
13.1
19.5
3.1
4.2
310.5
33.7
3.2
5
3
17
-78
3.8
FY16
51.8
64.8
70.8
16.9
39.3
17.5
14.0
12.8
2.1
9.3
11.4
1.9
8.3
126.6
40.5
2.7
3
4
26
-81
-0.3
FY17
43.2
55.1
98.3
32.0
89.0
21.0
16.5
9.2
1.8
10.3
15.2
3.5
14.5
51.0
31.4
2.9
4
3
21
-114
-0.6
FY18
58.3
69.7
184.1
6.0
12.4
15.6
13.0
4.9
1.3
8.5
10.3
0.7
8.5
41.3
31.0
2.4
4
4
22
-123
-0.6
FY19
4.1
23.8
180.7
5.0
148.1
223.7
38.1
5.0
1.0
13.2
-138.6
0.6
5.8
2.2
-4.0
3.1
3
5
22
-149
-0.9
FY20
-14.5
88.9
152.5
0.0
0.0
-62.7
10.2
6.0
1.1
10.3
10.7
0.0
-21.8
-8.7
8.0
1.6
3
3
18
-158
0.9
FY21E
-163.2
-50.3
-10.7
0.0
0.0
-5.6
-18.1
-84.8
3.3
-39.0
-31.9
0.0
-12.6
-230.2
-22.5
0.9
3
3
18
-335
-24.3
FY22E
64.4
183.6
45.9
6.4
12.0
14.1
4.9
19.8
1.1
4.2
4.1
0.7
32.9
365.5
24.3
1.7
3
3
18
-200
-0.4
Standalone - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
E: MOFSL Estimates
FY15
18,465
3,022
1,037
-3,951
7,765
26,338
23,839
-10,171
13,668
7,079
1,313
-1,779
3,817
-770
-16,128
-13,081
8,978
11,015
19,994
FY16
28,290
5,031
1,157
-5,761
3,081
31,797
31,157
-2,320
28,837
-2,623
3,344
-1,598
-10,241
-825
-13,437
-12,366
17,193
19,994
37,187
FY17
21,443
4,573
-4,583
-4,208
21,102
38,326
37,820
12,829
50,649
-27,273
7,891
-6,553
-6,114
-3,308
-14,769
-22,128
9,139
37,187
46,326
FY18
31,267
4,369
-6,070
-7,905
15,257
36,917
36,917
-7,356
29,562
-26,306
9,469
-24,193
-1,543
-3,398
-2,772
6,756
19,480
46,326
65,806
FY19
-1,492
7,596
-8,159
3,007
12,476
13,429
13,429
6,767
20,196
-1,727
13,248
18,289
-477
-5,090
-2,310
-11,460
20,258
65,806
86,063
(INR Million)
FY20
-5,838
39,739
3,402
94
87,639
1,25,036
1,25,036
-2,01,174
-76,137
-29,827
15,357
-2,15,643
1,37,320
-18,759
0
1,12,838
22,231
86,063
1,08,295
FY21E
-62,740
43,414
5,254
0
-1,00,397
-1,14,469
-1,14,469
70,564
-43,905
0
15,450
86,014
0
-20,703
0
-20,703
-49,158
1,08,295
59,136
FY22E
33,065
45,823
5,123
-8,322
58,326
1,34,015
1,34,015
-19,163
1,14,852
0
15,644
-3,519
0
-20,767
-2,973
-23,740
1,06,756
59,136
1,65,892
29 July 2020
8
 Motilal Oswal Financial Services
Indigo
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
29 July 2020
9
 Motilal Oswal Financial Services
Indigo
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
29 July 2020
10