This aviation stock has increased investors’ wealth by 25% in one year; What’s behind the rally
Shares of IndiGo’s parent company, InterGlobe Aviation, rose on Wednesday, a day after the company announced a leadership change.
Investors welcomed the development, with shares of the airline rising 1.5% at the start of trading. As of 10:45 a.m., the stock was trading up 1.1% at 1,984.90 rupees on BSE.
Deven Choksey of KRChoksey explained that the aviation company faces challenges with retaining people. Key management members are largely assigned to the start-up of two new airlines and as a result, there may be a shift in members from existing players like IndiGo to future ones.
He also pointed to rising aviation turbine fuel (ATF) prices, which he said airlines have ignored in the best possible way. However, there is uncertainty about the sustainability of the means they have adopted.
Therefore, there could be headwinds even if business conditions after the economy opens up remain extremely supportive for airline and hotel businesses, he said.
“The pressure would be on the cost and that’s where you’ll probably see the resistance headwinds… Not sure if to buy right now (airline stocks), maybe some corrective pricing could help make the decision faster,” he said. CNBC-TV18.
(Edited by : Akanksha Upadhyay)