IndiGo shares fly 11% as Iran war ceasefire, falling crude prices boost sentiment. What’s Jefferies saying
Shares of InterGlobe Aviation, the operator of IndiGo, surged as much as 11% to hit an intraday high of Rs 4,744 on the BSE on Wednesday, as easing geopolitical tensions following a two-week Iran ceasefire and a sharp fall in crude oil prices lifted investor sentiment. SpiceJet shares also saw strong buying interest, hitting a 5% upper circuit in today’s session.
U.S. President Donald Trump said he had agreed to a two-week ceasefire with Iran, contingent on the immediate and safe reopening of the Strait of Hormuz, a critical chokepoint that transports one fifth of global oil flows.
The development is significant for India’s largest airline by market share, as a sharp correction in crude oil prices directly lowers aviation turbine fuel (ATF) costs, one of its biggest expense heads. Since fuel accounts for a substantial portion of operating costs, any decline in crude typically translates into immediate margin expansion for airlines.
Additionally, easing geopolitical tensions reduce operational disruptions such as airspace restrictions and longer flight routes, which had earlier increased fuel burn and costs. Key transit hubs such as Dubai, which is the world’s busiest international airport hub, along with Abu Dhabi in the United Arab Emirates and Doha in Qatar were either shut or operating under severe restrictions, as much of the region’s airspace remained closed following US and Israeli strikes.
The mutually agreed ceasefire came just ahead of Trump’s deadline for Iran to reopen the Strait of Hormuz, a key route that carries 20% of the world’s oil supply, or face broad attacks on its civilian infrastructure. “This will be a double sided CEASEFIRE!” Trump wrote on social media. Earlier on Tuesday, he had warned that “a whole civilization will die tonight” if his demands were not met.
Live Events
In its 4QFY26 preview, Jefferies pegs IndiGo’s ASK growth at “~4% YoY in 4QFY26 (vs Co’s original guidance at 10% YoY)” and models a ~4% YoY moderation in PRASK, alongside a sharp mark-to-market forex hit. It builds in “~Rs40bn of forex MTM loss for 4Q” and now expects a 4QFY26 PAT loss of about Rs 25 billion, with ex-forex PAT down 49% year-on-year to Rs 15 billion.
Even so, the stock remains a core holding: Jefferies keeps its buy rating but trims the target price to Rs5,500 from Rs6,140, valuing IndiGo at “9.5x FY28 EV/EBITDA (implies ~25x FY28 EPS).” It sums up the near-term picture bluntly, noting that Middle East disruptions, “higher fuel, neg forex impact and lower utilisation would hurt RASK-CASK spreads” and imply losses in 1HFY27 despite fare hikes.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
