Interglobe Aviat (INDIGO)

FairStock Score: 42/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• 5-year revenue CAGR of 40.73% demonstrates strong scale and demand growth
• Positive free cash flow of ₹11,393 Cr provides some cushion despite leverage
• Promoter holding of 41.57% aligns shareholder interests with management
• ROCE of 17.34% is respectable for an asset-heavy airline

Concerns

• Debt/Equity of 8.67 is extremely high, and current ratio of 0.90 shows liquidity strain
• Profit after tax fell 47.24% even as sales grew 10.72%, showing fragile margins
• Valuation is far above intrinsic: Graham Number ₹646.27 and DCF ₹760.03 vs price ₹4,555.65
• EV/EBITDA of 444.21 and P/E of 41.17 are unjustifiable for a cyclical with falling profits

AI Analysis

Indigo is a business I can understand, but understanding doesn't make it attractive at this price. The airline industry eats capital, and though Interglobe has grown revenue at a 40.73% CAGR over five years, the latest quarter shows a net profit of only ₹613 Cr on sales of ₹23,472 Cr—a margin of roughly 2.6%. Reported profit fell 47.24% even as sales grew 10.72%, telling me this is a cyclical, low-margin business with high operating leverage. The 37.19% ROE looks impressive, but with debt/equity at 8.67, that return is built on a towering pile of leverage, not on sustainable earning power. ROCE of 17.34% gives a truer picture, and even that is modest for the risks involved. Free cash flow of ₹11,393 Cr is comforting, but with a current ratio of 0.90, the company is dependent on refinancing and cash flows to meet near-term obligations. The Piotroski score of 6/9 shows decent fundamentals, yet the Altman Z-Score of 2.07 puts it in the grey zone. Now valuation: at ₹4,555.65, the market cap is ₹1.87 lakh Cr. The Graham Number is ₹646.27 and DCF value is ₹760.03—even making generous assumptions, price offers negative margin of safety of -647%. P/E of 41.17 and EV/EBITDA of 444.21 price in perfection for a business whose profits are collapsing. As Graham said, price is what you pay, value is what you get. Here, you're paying a fortune for a cyclical at its fragile point. I'd watch from the sidelines.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer