Before analyzing Indigo, let us first understand different parameters to look for in an aviation company.
Available Seat Kilometer (ASK) – It captures the total flight passenger capacity of an airline in kilometers. It is obtained by multiplying seats available and distance flown – seats available ×distance flown
Revenue Passenger Kilometer(RPK) – It is the total revenue generated by flight passengers. That is No. of Paying Passengers x distance flown.
Fuel Savings – This depends on the Airbus that is being used. This parameter is similar to the one in automobiles. Some Bikes are fuel efficient and some are not. In the same way some airbuses are fuel efficient and some are not
Cost per Available Seat Kilometers (CASK) – This is the operational cost of each seat per kilometer flown. We can see this as a break even price for each seat.
Indigo – Indigo is a brand of Inter Globe Aviation Limited operating with a focus on providing “low fares, ontime flights and a hassle-free experience”. Indigo operates on a LCC(Low Cost Carry) business model, characterised by features such as single aircraft type fleets, aircraft with greater fuel efficiency and lower maintenance costs, faster turnaround times to increase aircraft utilisation, and low debt positions;
Market share – Indigo is the largest passenger airline with a market share of 36.9% as of FY16.
Number of Flights – Indigo has a total fleet 107 air crafts servicing 35 domestic destinations and 5 International destinations. It has also put an order of 430 more A320Neo airbuses which are 15% more fuel efficient.
Levels around Rs. 800 acted as a good support and we saw a good bounce back from there. The stock was also able to cross the immediate resistance of Rs. 1000 level. Also, a golden crossover has happened in Daily chart which is a bullish sign. And most importantly the stock has crossed the major resistance at Rs.1110 level.