Domestic Demand and Fuel Cost Tailwinds Power Bullish Sentiment
Shares of InterGlobe Aviation (IndiGo) rose over 3 percent on April 15, nearing their all-time highs, after Motilal Oswal Financial Services upgraded the stock to ‘Buy’ with a target price of ₹6,550. The brokerage cited a combination of robust domestic air travel demand, easing crude oil prices, and strategic international expansion as key drivers for the upgrade.
Motilal Oswal identified IndiGo as the “best domestic consumption play”, highlighting that aviation turbine fuel (ATF) — which accounts for nearly 40 percent of operating costs — could significantly boost margins if Brent crude prices fall as expected. The firm anticipates Brent to decline to $65 per barrel by FY26-27, amid growing signs of a global surplus and a likely unwinding of OPEC+ supply cuts.
Highlights:
IndiGo shares jump over 3% after Motilal Oswal upgrades to ‘Buy’ with a target of ₹6,550.
Brokerage calls IndiGo the “best domestic consumption play”.
Easing crude oil projected to fuel margin expansion through FY26-27.
Operational Strength and Strategic Expansion Bolster Market Position
IndiGo’s profitability outlook is being reinforced by multiple structural advantages. According to Motilal Oswal, the company is poised to deliver 28% EBITDA CAGR and 38% PBT CAGR between FY25 and FY27, driven by:
Aggressive international route expansion
New aircraft deliveries
Rising cargo business
Expanding codeshare agreements
The recent exit of GoFirst from the Indian aviation market has also allowed IndiGo to capture incremental market share, strengthening its leadership in both the low-cost and full-service segments. The airline has also exhibited a consistent record of profitability post-COVID, indicating effective execution and strategic clarity.
IndiGo’s valuation remains attractive at 20x FY26 P/E and 9.7x FY26 EV/EBITDA, according to Motilal Oswal. The brokerage sees this as reasonable, given the expected margin tailwinds, scale advantages, and IndiGo’s dominance in India’s fast-growing aviation sector.
Highlights:
IndiGo expected to post 28% EBITDA CAGR and 38% PBT CAGR from FY25–FY27.
Gaining market share after GoFirst’s exit.
Strong performance driven by international expansion, cargo, and fleet upgrade.
Geopolitical Signals Support Global Growth Outlook
Adding to the positive outlook was recent commentary from Donald Trump on auto tariffs, interpreted by markets as a signal of a more flexible US trade stance. Analysts believe this could indicate a softening of global trade dependencies, a development that would benefit Indian carriers such as IndiGo which are in the midst of international route expansion.
For IndiGo, which is steadily building a comprehensive global codeshare network, such macro-level trade softening is expected to reduce operational hurdles and enable profitable market entry in new regions. These international moves come as part of a long-term push to reduce over-reliance on the Indian domestic market and diversify earnings through a broader global footprint.
Highlights:
Trump’s auto tariff remarks seen as easing global trade stance.
IndiGo’s international expansion and codeshare strategy to benefit from improved trade environment.
Lower geopolitical friction supports profitable global market access.
Market Capitalisation Milestone Reinforces Strategic Trajectory
IndiGo recently drew global attention by briefly overtaking Delta Airlines and Ryanair to become the world’s most valuable airline by market capitalisation. This landmark moment underscores the investor confidence in IndiGo’s long-term fundamentals, execution quality, and growth strategy.
The airline’s ability to sustain profitability and scale operations post-pandemic, despite industry-wide turbulence, has solidified its position as the dominant force in Indian aviation. Motilal Oswal’s latest upgrade reflects the growing conviction in the airline’s future earnings potential, bolstered by favourable cost dynamics, strategic foresight, and execution consistency.
Highlights:
IndiGo briefly becomes world’s most valuable airline by market cap.
Strong investor confidence in IndiGo’s long-term fundamentals.
Motilal Oswal’s bullish outlook reflects faith in strategic execution and cost efficiencies.
