InterGlobe Aviation shares rose on Thursday as HSBC maintained its bullish outlook for the airline to launch business class services on some major metro routes.
HSBC said in an Aug. 21 note that the introduction of IndiGo’s business class would end the monopoly held by Vistara and Air India. While it may not translate into increased profits in the short term, it could reduce corporate exodus and strengthen its position, HSBC said.
The airline said it was unclear how fares would trend, but that a capacity shortage could keep airfares high. “The strategic changes could give IndiGo a stronger competitive edge in the long term,” it said.
Indigo said the launch price of its business class seats is very competitive and should make up for missing features in its premium product. “However, there is some pessimism in the market about demand for Indigo’s premium product.”
The memo said the main focus would be on the third quarter, a seasonally strong period for airlines.
The brokerage maintained its buy recommendation while raising its target price to Rs 5,165 per share from Rs 5,120, implying a 20 per cent upside from the previous close.
