Shares of InterGlobe Aviation recovered over 1% from early losses on Monday, 27 April, even as UBS downgraded the stock to “neutral” from “buy”. The brokerage also cut its target price for the stock to ₹4,940 from ₹5,480, citing rising headwinds for the aviation sector.
IndiGo started the day on a flat note but in the red. However, it later recovered 1.4% to its day’s high of ₹4571.
According to a CNBC-TV18 report, UBS flagged rising volatility in the airline sector as jet fuel prices nearly doubled amid the US-Iran conflict. The brokerage also pointed to early demand fatigue, with passenger traffic weakening due to fare hikes, and trimmed growth assumptions. While IndiGo remains better positioned than peers due to strong liquidity and scale, UBS believes its recent outperformance looks stretched amid rising costs and currency headwinds.
Reasons for downgrade
UBS flagged elevated volatility in the global airline industry, noting that jet fuel spot prices have nearly doubled amid the ongoing US-Iran conflict, with supply concerns persisting across markets, said the media report.
“Jet fuel spot prices have nearly doubled and supply concerns remain elevated, leading us to raise our FY27 and FY28 fuel cost assumptions by 28% and 30%, respectively,” UBS said, as per the report.
While India capped Aviation Turbine Fuel (ATF) price hikes at 9% for April 2026 compared to a 115% surge in global prices in March, the brokerage believes sustained high crude prices—around $200 per barrel—could continue to pressure margins.
UBS also highlighted early signs of demand fatigue, with April passenger traffic showing sequential and annual declines, partly due to fare hikes. It trimmed its demand assumptions, warning that fuel surcharges could weigh on revenue passenger kilometre (RPK) growth.
Despite these concerns, UBS noted that IndiGo remains better positioned than its peers due to strong liquidity, scale, and a robust domestic franchise.
“While IndiGo is better placed than peers given its balance sheet and scale, its recent outperformance appears stretched amid rising fuel costs and currency headwinds,” UBS added.
IndiGo Stock Performance
The airline stock has shown mixed trends. It has rebounded 16% from recent lows and is currently trading 6% below pre-conflict levels, outperforming global airline peers during the period of geopolitical stress.
However, longer-term performance remains under pressure, with the stock down 15% over the past year and 5% in the last three months, even as it gained 10% in the past month.
The stock hit a 52-week high of ₹6,225.05 in August 2025 and a 52-week low of ₹3,894.80 in March 2026.
Meanwhile, IndiGo is slated to announce its March quarter results for the financial year 2025-26 tomorrow, 28 April 2026.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
