Indigo shares jump 4% after Jefferies upgrades stock; buy, sell or hold?

Interglobe Aviation, the company behind IndiGo Airlines, experienced a 4 percent rise in its share price, reaching ₹4,459 on August 22, following optimistic outlooks from Jefferies and HSBC, which highlighted robust growth potential in various areas.

Jefferies upgraded its rating from 'hold' to 'buy,' while HSBC kept its 'buy' rating on the country's leading airlines by market share.

Jefferies has raised the target price to ₹5,225, suggesting a potential upside of 21.5 percent from the current market levels. The analysts highlight that the airline has consistently outperformed over the last 12-18 months.

They observe that limited industry capacity has maintained strong yields and spreads, and recent increases in supply have led them to raise their spread estimates and EPS forecasts by 6-7 percent for FY26/27.

Should you buy or sell?

HSBC has issued a "buy" recommendation for IndiGo with a target price of ₹5,165. According to the brokerage, the introduction of a business class has broken the monopoly previously held by Vistara and Air India in this segment. This move is expected to attract more corporate travelers and strengthen IndiGo’s market position.

Additionally, the airline's loyalty program, extensive network, and significant corporate market share could contribute to the success of its premium offering. However, HSBC cautioned that the launch of business class may not lead to an immediate increase in profit margins.

On August 5, IndiGo launched "IndiGo Stretch," a new tailored business class service. This premium option will be available on all 12 metro routes departing from Delhi. As part of the IndiGo Stretch offering, each flight will include 12 business class seats and feature curated meals. The inaugural business class flight is scheduled between Delhi and Mumbai in mid-November.

Earlier this month, IndiGo launched its business-class service, IndiGo Stretch, set to commence in November. Initially available on routes between metro cities, the low-cost airline plans to extend this service to additional routes by 2025.