Nomura has maintained its 'Buy' rating on InterGlobe Aviation with a target price of Rs 6,000, saying visibility remains low on the new airfare rules that the government is expected to notify within two weeks.
According to a news report on proceedings related to petition, the government would notify new rules related to airfares under the Bharatiya Vayuyan Adhiniyam, 2024, within two weeks.
"Overall, we think visibility remains low on the new rules. Nevertheless, our base case is higher oversight/transparency on the margin on airfares and stronger disclosures related to fares/ancillary components rather than direct government intervention," Nomura said in a note dated October 17.
The brokerage's base-case assumptions for FY28 factor in yields remaining largely flat, down 2% year-on-year, while Singapore jet fuel prices decline 13% year-on-year as geopolitical conditions partly normalise. This would lead to revenue and EBITDA compound annual growth rates of 16% and 38%, respectively, over FY26-29.
However, if yields decline 5% year-on-year in FY28 due to increased oversight, the risk to InterGlobe Aviation's FY28 EBITDA would be 10%, Nomura said, adding that this could be partly offset by higher load factors.