IndiGo Shares Rise as HSBC Stays Optimistic Post Business Class Launch
Shares of InterGlobe Aviation Ltd., the parent company of IndiGo, saw a notable increase after HSBC maintained its positive outlook following the airline's introduction of business class service on key metro routes. The launch of IndiGo’s business class marks a significant shift, ending the previous dominance of Vistara and Air India in this segment, according to HSBC’s note on August 21.
While the immediate margin impact of this new service may be limited, HSBC highlighted that it could help IndiGo capture a larger share of corporate traffic and enhance its market position. The competitive pricing of IndiGo’s business class seats is expected to compensate for any lack of premium features, the note added.
Despite some market skepticism about the demand for IndiGo’s premium offering, the third quarter, typically a strong period for airlines, will be crucial for the carrier. HSBC has maintained a 'buy' rating on IndiGo’s stock.
IndiGo shares rose by up to 4% during the day, later settling at a 3.18% gain to trade at Rs 4,436.70 apiece. This compares to a modest 0.2% increase in the benchmark Nifty 50 index. The stock has surged 79% over the past year and 49% year-to-date. Trading volume for the day was 3.2 times the 30-day average, with a relative strength index of 59.
