While revenue is projected to grow modestly on a YoY basis, higher base, weaker load factors, and stable-to-soft yields are likely to drag down PAT and EBITDAR on a quarter-over-quarter basis.
The market will closely monitor management’s commentary on grounded Pratt & Whitney (P&W) engine aircraft and international expansion strategies.
The estimates from Nuvama Institutional Equities, Motilal Oswal Financial Services (MOFSL) and JM Financial have been taken into account. Here’s what they recommended:
PAT
Nuvama: Rs 2,773 crore, up 2% YoY and down 10% QoQ
Motilal Oswal: Rs 2,380 crore, down 12% YoYKotak Equities: Rs 2,173 crore, down 20.4% YoY and down 29.2% QoQ JM Financial: Rs 2,513 crore, down 7.9% YoY and down 18.1% QoQ
All brokerages foresee a sequential drop in profit, citing weak load factors, pressure on yields, and elevated operating costs.
Revenue
Nuvama: Rs 21,024 crore YoY, up 7% YoY and down 5% QoQ
Motilal Oswal: Rs 21,350 crore, up 9.1% YoY
Kotak Equities: Rs 21,267 crore, up 8.7% YoY and down 4% QoQ
JM Financial: Rs 20,947 crore, up 7% YoY and down 5.4% QoQ
EBITDAR/EBITDA
Nuvama: EBITDAR seen at Rs 6,434 crore up 11% YoY and down 7% QoQ
Motilal Oswal: EBITDAR is pegged at Rs 6,140 crore
Kotak Equities: EBITDA expected at Rs 5,244 crore, up 1.6% YoY and down 13.9% QoQ
JM Financial: EBITDA of Rs 5,420 crore expected, up 5.1% YoY and down 11% QoQ
EBITDA/EBITDAR growth is expected to slow down QoQ despite lower fuel CASK, as revenue yield softens and load factor slips from previous quarters.
EBITDAR stands for Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent (or Restructuring) costs.
EBITDA/EBITDAR margin
While Motilal Oswal expects EBITDAR margin at 28.8% versus 29.5% in the year ago period, Kotak Equities has estimated EBITDAR margin at 24.7%, declining by 171 bps YoY and 284 bps QoQ).
Key monitorables
The brokerages have suggested monitoring updates on Indigo’s grounded aircraft along with clarity on P&W engine issues and their impact on fleet capacity.
Kotak will keep its watch on yield trend and load factor as average fares remain flat. Updates on new routes, code-share agreements, and market share gains in global operations will be key monitorables for MOFSL.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
