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The broader markets are already trading weak since the opening tick, with the large-cap index falling 0.2% to 19,485, by 10:30 AM IST. Even the frontline counters are not able to hold their ground and one such stock is Interglobe Aviation Ltd (NS:).
It is a well-known airline with a market capitalization of INR 98,904 crore and yesterday it came out with its Q1 FY24 earnings report. The company reported a 31.8% YoY jump in revenue to INR 17,160.87 crore, however, at the EBITDA level, the company saw a mindboggling jump of 615.3% to INR 5,452.26 crore.
From the loss of INR 1,064.26 crore in Q1 FY23, the company turned profitable with a net profit of INR 3,090.61 crore this time, translating into a healthy profit margin of 18.01%. Operating in the aviation space is not an easy task and such margins are confidence-building.
The company’s steady total expenses at INR 14,070.1 crore in Q1 FY24, from INR 14,083.1 crore a year ago was a major determinant of good profit margins. Fuel expenses are one of the major components of cost for an airline, which declined from INR 123.37 per litre to INR 95.65 per litre in a year. Also, the company was favored by fluctuations in the forex exchange rates.
Image Description: Daily chart of Interglobe Aviation with volume bars at the bottom
Image Source: Investing.com
The street probably had expected more, which is why despite good numbers, the stock is down 3% to INR 2,480, as of writing. On the chart, the stock is forming a classic rounding top formation which is a reversal signal and a mirror image of a more-popular rounding bottom. Today’s fall amid good Q1 FY24 numbers has continued this reversal pattern, which should not be ignored.
The stock seems weak and probably has made its short-term top. As long as the current ATH level is not breached, traders might be better off hunting for short opportunities on rallies.
Another reason for investors fleeing from Indigo is the recent approval of the Airport Operator Certificate (AOC) of Jet Airways (NS:) by the Directorate of Civil Aviation (DGCA). This has instilled fresh hopes for Jet Airways to fly again. As of yesterday’s price, Jet Airways shares hit the 8th consecutive upper circuit.
Read More: 2 Breakout Shares that Started the Week with a Bang!
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