New Delhi -°C
Today in New Delhi, India

Apr 09, 2020-Thursday
-°C

Humidity
-

Wind
-

Select city

Metro cities - Delhi, Mumbai, Chennai, Kolkata

Other cities - Noida, Gurgaon, Bengaluru, Hyderabad, Bhopal , Chandigarh , Dehradun, Indore, Jaipur, Lucknow, Patna, Ranchi

ADVERTISEMENT
Home / Business News / IndiGo shares fall most in over 2 years as Q4 profit disappoints

IndiGo shares fall most in over 2 years as Q4 profit disappoints

InterGlobe Aviation shares have plunged 22% since touching a record on April 20, wiping out almost $2 billion in market value.

business Updated: May 03, 2018 15:47 IST
P R Sanjai
P R Sanjai
Bloomberg
The parent company of India’s top carrier IndiGo on Wednesday declared that its Q4 profit slumped 73%  to Rs 118  crore,  hurt by higher expenses and surging fuel costs.
The parent company of India’s top carrier IndiGo on Wednesday declared that its Q4 profit slumped 73% to Rs 118 crore, hurt by higher expenses and surging fuel costs.(Reuters File Photo)

Shares of InterGlobe Aviation Ltd., which runs IndiGo, India’s biggest airline, tumbled the most in more than two years after net income and revenue fell short of estimates due to a rise in fuel costs and foreign-exchange losses.

IndiGo dropped as much as 20% in intraday trading on Thursday, the biggest intraday decline since January 2016, according to data compiled by Bloomberg. The stock has plunged 22% since touching a record on April 20, wiping out almost $2 billion in market value.

At close, the stock settled 10.63% lower to Rs 1,200.05 on the National Stock Exchange (NSE).

Higher fuel costs make it difficult for airlines to maintain low ticket prices in the country. Shares of IndiGo’s India-based rivals Jet Airways (India) Ltd. and SpiceJet Ltd. also fell, by as much as 14% and 9% respectively.

IndiGo’s net income dropped 73% to Rs 118 crore ($18 million) in the three months through March from a year ago. That compares with the average estimate of Rs 499 crore in a Bloomberg survey.

| Read: IndiGo’s Q4 profit falls 73% to Rs 118 crore

The disappointing earnings come on the back of the resignation of president Aditya Ghosh last week, an announcement that triggered the sell-off. Twelve years after kick-starting services, the budget airline that controls almost 40% of India’s air travel market is facing turbulence at a time it’s pursuing its low-cost, long-haul ambitions. The latest Airbus SE A320neo aircraft powered by some faulty Pratt & Whitney engines have hobbled operations after snags led to the grounding of many planes.

“Aditya Ghosh’s exit has rattled investors,” said Mark Martin, founder of Martin Consulting. With oil where it is, “airline stocks the world over will be affected on account of a hit on earnings and yield.”

| Read: SEBI said to probe drop in IndiGo shares before Aditya Ghosh’s exit

A more than 40% jump in crude oil prices in the past year has raised fuel costs for airlines.