Indigo shares jump over 4% after rating, target upgrades

Kotak, on the other hand, raised the target to Rs 4,300 from an earlier target of Rs 4,200. The near-term outlook is comforting on both ASK (available seat kilometers) growth and pricing, reflective of IndiGo’s planning and strength of the underlying demand, this brokerage said.

Kotak highlighted company management's confidence on charting its growth trajectory, unperturbed by externalities. The focus from hereon is to grow connectivity to have a larger share of international journeys and invest in systems and operations, this brokerage said.

In a recently concluded analyst meet, IndiGo shared an improving outlook for pricing for Q4 which is up on a year-on-year basis versus the earlier flat YoY guidance.

In Kotak's view, IndiGo differentiates against the typical LCC (low-cost carrier) on several counts viz. high frequency on major city pairs, several codeshare arrangements, and large connectivity covering 88 of the 125 airports.

Indigo shares have given returns of nearly 90% in the past 12 months which is a significant outperformance over Nifty with 28% returns during this period. The counter is currently trading above its 50-day and 200-day simple moving averages (SMAs).

With the recent rally, the stock is now trading in an overbought zone with MFI hovering near the 80 mark according to data sourced from Trendlyne. A number above 70 is considered to be overbought while below 30 is seen to be oversold.

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