<ul><li><keyword id="6354706" type="General" weightage="20" keywordseo="indigo" source="Orion">Indigo</keyword> narrowed its losses by 66% on year to ₹1,064 crore in June quarter as against ₹3,174 crore last year.</li><li>Jet fuel prices rose by a massive 95.5% during the quarter and the airline also had to incur foreign currency losses.</li><li>Indigo says that if foreign currency loss of ₹1,424 is excluded, the company would make net profit of ₹360 crore.</li></ul>India’s biggest airline, InterGlobe Aviation aka Indigo, could have had a good April-June quarter as it was the summer season of travel, and the first such quarter without Covid lockdowns in two years, that brought aviation to a grinding halt. But this has only allowed them to narrow their losses to ₹1,064 crore in June quarter as against ₹3,174 crore last year. This is in spite of a four four-fold rise in revenue from operations to ₹12,855 crore as its capacity swelled by 145%. Along with economic activity coming back, it also had to deal with jet fuel prices rising by a massive 95.5% during the quarter, foreign currency losses due to a volatile currency and more. Indigo says that if foreign currency loss of ₹1,424 is excluded, the company would make net profit of ₹360 crore. “We reported the highest ever revenue generated by the company and thereby produced profits at an operational level. However, cost pressures on fuel and foreign exchange prevented us from translating this strong revenue performance into net profitability. While our financial performance in the second quarter will be challenged by weak seasonality, the long-term revenue trend remains strong,” said CEO, Ronojoy Dutta. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"><colgroup></colgroup><col /><col /><col /><col /><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Particulars </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Revenue </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Profit/loss </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Total expenses </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q1 FY23 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹13,018 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">(₹1,064 crore) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹14,083 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q1 FY22 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹3,170 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">(₹3,174 crore) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹6,344 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q1 FY21 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1,143 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">(₹2,844 crore) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹3,986 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q1 FY20 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹9,786 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1,203 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹8,277 crore </td></tr></tbody></table> Indigo could book profits in December quarter The next quarter won’t get any better either, as the seasonal effect of the summer quarter will go away. Revenue is expected to fall next quarter as schools open, monsoons, and the month of shrad when fewer people travel. “All these things tend to hold back the second quarter revenues. And it's been historically and not a one year phenomenon,” said Dutta in an analyst call. Dutta however hopes that if fuel and foreign exchange pressures ease, they would deliver profits in the third quarter of the fiscal year. “If fuel and foreign exchange behave just a little bit I think we could have a focused storm of profitability in the third quarter,” he said. ‘Giving up trains for us’ Indigo resumed scheduled international operations and are now roughly operating at pre covid international levels. The capacity deployed in June quarter was around 35% higher than previous quarter and around 7% higher than pre covid capacity. He added that corporate travel has been strong. “Also, people are traveling like crazy to tourist destinations. So markets like Srinagar, Leh, Dehradun, Goa are all performing very well. “We are getting substitution from rail into airline in all these short fall markets, whether it is Delhi-Lucknow, Delhi-Dehradun, Kolkata-Devgad, people are giving up trains and coming to us. This is a positive sign,” he said. Even as the love for travel increases, most airlines will have to battle new competition like the launch of Rakesh Jhunjhunwala backed <keyword id="11911527" type="General" weightage="20" keywordseo="akasa-air" source="Orion">Akasa Air</keyword>, the comeback of <keyword id="6358200" type="General" weightage="20" keywordseo="jet-airways" source="Orion">Jet Airways</keyword> and the re-launch of <keyword id="2573" type="General" weightage="20" keywordseo="air-india" source="Orion">Air India</keyword>. “The fact that competition is increasing and addition in flights but also its quite small, the capacity is limited at this point. We don’t see too much impact from the competition, if anything we see a healthy industry environment as far prices are concerned,” said Dutta. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rbi-and-us-fed-policies-are-more-similar-than-you-think/articleshow/93329850.cms">RBI and US Fed policies are more similar than you think</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/pvr-manages-to-outperform-inox-in-q1-of-fy2023/articleshow/93326469.cms">PVR manages to outperform INOX in Q1 of FY2023</a>

Indigo might have to wait another six months before it gets back to profitability

Leading carrier <keyword id="6354706" type="General" weightage="20" keywordseo="indigo" source="Orion">Indigo</keyword>, announcing its latest financial results on Wednesday, said that the first quarter of fiscal 2023 witnessed its strongest revenue performance, resulting in the highest-ever quarterly revenue of Rs 130.2 billion. "Headwinds caused by depreciating rupee and higher fuel prices led to a net loss of Rs 10,643 million for the quarter ended June 2022. Excluding foreign currency loss of Rs 14,246 million, net profit for the quarter aggregated to Rs 3,603 million," the airline said. For the quarter ended June 30, 2022 compared to the same period last year, the airline reported that passenger numbers increased by 221.9 per cent, yield improved by 50.3 per cent and load factor improved by 20.9 points. It said that revenue from operations increased by 327.5 per cent to Rs 128,553 million and capacity increased by 145 per cent. Indigo also said that the period recorded rise in the fuel prices by 95.5 per cent. It said that the profit, before foreign exchange loss, was Rs 3,603 million, compared to a loss of Rs 28,069 million. Besides, the airline witnessed a net loss of Rs 10,643 million, compared to a net loss of Rs 31,742 million. CEO, Ronojoy Dutta said: "Our revenue performance this quarter was impressive. We reported the highest-ever revenue generated by the company and thereby produced profits at an operational level. However, cost pressures on fuel and foreign exchange prevented us from translating this strong revenue performance into net profitability. While our financial performance in the second quarter will be challenged by weak seasonality, the long-term revenue trend remains strong." Total income for the quarter ended June 2022 was Rs 130,188 million, an increase of 310.7 per cent over the same period last year, said Indigo. "For the quarter, our passenger ticket revenues were Rs 114,669 million, an increase of 399.1 per cent and ancillary revenues were Rs 12,863 million, an increase of 92.5 per cent compared to the same period last year," it said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/this-adani-group-stock-has-doubled-in-12-months-and-has-surpassed-market-cap-of-itc-maruti-and-lt/articleshow/93322976.cms">This Adani group stock has doubled in 12 months and has surpassed market cap of ITC, Maruti and L&amp;T</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/sports/news/commonwealth-games-medals-tally-at-2022-birmingham-games/slidelist/93274345.cms">Commonwealth Games 2022: India has won 3 gold medals so far, check out all the details here.</a>

Indigo reports highest-ever quarterly revenue of ₹130 billion

<img class="gwt-Image" src="/photo/50720028.cms" style="width: 800px; height: 600px;" /> Even as <keyword id="6354706" type="CITY" weightage="80" keywordseo="Indigo">Indigo</keyword>'s stock continued to fall on the bourses and is trading at about 6.25% lower on <keyword id="35140" type="CITY" weightage="80" keywordseo="BSE">BSE</keyword>, the Bombay Stock Exchange has sought a clarification from the company regarding the fact that talked about the airline seeking compensation from <keyword id="6356166" type="COMPANY" weightage="80" keywordseo="Airbus">Airbus</keyword>. 
 "The Exchange has sought clarification from <keyword id="1581849" type="COMPANY" weightage="80" keywordseo="Interglobe-Aviation-Ltd">InterGlobe Aviation Ltd</keyword> on January 25, 2016 with reference to news reported in The Economic Times on January 25, 2016- 'Indigo asks Airbus to compensate for delay'," said a notification on the BSE website. 
 
ET had also reported today that IndiGo is negotiating with Airbus and Pratt &amp; Whitney for more incentives on technical support and maintenance as part of the compensation for delay in deliveries of A320Neo planes, and is also pushing the engine maker for higher levels of efficiency on the plane engines. 
 
Airbus Neos, or New Engine Options, are the upgraded versions of the 180-seater Airbus 320, the most popular single aisle aircraft in the world. IndiGo has a total of 430 Neo planes on order, the first of which was supposed to be delivered to it by December or early January. 
 
This uncertainty over deliveries is being cited as one of the reasons that made the airline's stock tank 19% last Thursday, despite a 24% rise in net profit.

BSE seeks clarification from Indigo on seeking compensation from Airbus

<img class="gwt-Image" src="/photo/49632336.cms" style="width: 800px; height: 600px;" /> 
 According to a prospectus on Monday, <keyword id="1581849" type="COMPANY" weightage="80" keywordseo="Interglobe-Aviation-Ltd">InterGlobe Aviation Ltd</keyword>, owner of Indian budget airline <keyword id="6354706" type="CITY" weightage="80" keywordseo="Indigo">IndiGo</keyword>, raised Rs 3,010 crore ($458.91 million) in an initial public offering after setting the pricing at Rs 765 per share. 
 
That was at the upper end of a price range of Rs 700 to Rs 765 per share. The book-building closed last week, having attracted orders worth six times the number of available shares. 
 InterGlobe's <keyword id="6354763" type="EVENT" weightage="80" keywordseo="IPO">IPO</keyword> is India's biggest since the listing of around $750 million by Bharti Infratel Ltd in December 2012. It will make its market debut later this month. 
 
On Tuesday, market debutant Coffee Day Enterprises slumped 17.6 per cent below its IPO price of Rs 328 as investors fretted over a generous price tag they said underestimated concerns around its complex structure. 
 
Image credit: Indiatimes

Indigo raises Rs 3,010 crore in IPO

New Delhi, Feb 25 () A preliminary probe by markets regulator Sebi has suggested prima-facie violations of corporate governance and listing disclosure norms in certain related party transactions involving budget carrier IndiGo's parent firm InterGlobe Aviation Ltd, sources said. While the company said it has not received any communication from Sebi in this regard, shares plunged sharply in afternoon trade on Tuesday. IndiGo has been facing a probe by the Securities and Exchange Board of India (Sebi) ever since a public spat came to light between two founders of the airline, including over certain related party transactions involving one of the warring promoters. The sources said that a preliminary probe has now suggested violation of certain listing disclosure norms as also of fair corporate governance practices at the company. InterGlobe shares closed 4.68 per cent lower at Rs 1,376.70 apiece on the BSE, after hitting an intra-day low of Rs 1,334 in afternoon trade after a sudden plunge following media reports about the Sebi probe."We would like to state that the news item published in some media reports is factually incorrect and the company has not received any communication from Sebi in this regard," the company said in a filing to the BSE. This came after the exchange sought a clarification from the company on the reports. There was no official word on the probe from Sebi, which has been conducting a thorough probe into the IndiGo matter. All agreements between the two warring founders as well as those between the company and its various investors and associates, including related parties, are being looked into by the watchdog. The probe has suggested that some of the related party transactions could have been significant and required detailed disclosures and greater vetting by board committees comprising of independent directors, the sources said. The differences between co-founders and co-promoters -- Rakesh Gangwal and Rahul Bhatia -- came to the fore in July 2019 after Gangwal sought market regulator Sebi's intervention to address alleged corporate governance lapses at the company. In the wake of the feud, arbitration proceedings are also going overseas between the two promoters' sides. Last month, InterGlobe Aviation's shareholders rejected a proposal of Rakesh Gangwal to amend the company's Articles of Association (AoA). Generally, an AoA provides the regulations for operating a company. Rakesh Gangwal (RG) Group and related entities together hold 36.64 per cent stake while Bhatia and affiliates -- InterGlobe Enterprises (IGE) Group -- have around 38 per cent shareholding in the company. BJ RAM

Sebi probe suggests prima-facie violations of norms in IndiGo related party transactions; shares plunge

<ul><li>The low-cost airline's profit hits a new record as jet fuel prices fall and competition decreases.</li><li>IndiGo's management said that the company managed to reduce its cost of fuel by 11%, even though the actual fall in aviation turbine fuel was much lesser.</li><li>IndiGo's Chief Executive Officer Ronojoy Dutta dismissed any significant benefit from the disappearance of Jet Airways from Indian skies.</li></ul> InterGlobe Aviation Ltd-owned India's biggest airline by market share, IndiGo, on Friday posted its highest ever quarterly net profit at ₹1,203 crore for the first-quarter of 2019-20. "Strong passenger revenues along with a sharp improvement in cargo performance were key drivers to this improved profitability. We are particularly pleased with this quarter because it demonstrated our ability to grow rapidly while simultaneously expanding our margin performance," the company's CEO, Ronojoy Dutta said. In a conference call with analysts, the management highlighted that its efforts in managing its fleet and routes led to a fall in fuel cost of 11% during the quarter whereas the actual fall in jet fuel was much lesser. "Going forward, obviously, this quarter the aircraft utilisation was a little lower due to some temporary issues. As that improves there will be some tailwinds in terms of fixed costs," Rohit Philip, the chief financial officer of IndiGo said. Sales jumped 42% to ₹9,420 crore and market share has steadily risen since rival Jet Airways went bankrupt and stopped flying. This has helped all airlines charge higher airfares while costs came down, helping their profits. However, Chief Executive Officer Ronojoy Dutta dismissed any significant benefit from the disappearnce of Jet Airways on the company's performance. IndiGo only got 35 slots vacated by Jet in the Mumbai airport and that's a small portion of the total 1400 slots IndiGo has. For fiscal year 2020, year over year capacity increase in available seat per kilometre is expected to be 30%, the company said in a presentation. SEE ALSO: <a href="https://www.businessinsider.in/indigos-share-price-crashed-10-7-to-1397-on-wednesdays-closing/articleshow/70158806.cms" data-type="tilCustomLink" target="_blank">IndiGo’s shares crash to a new low after a promoter alleges the other of governance violations</a>

IndiGo airline's profit hits a new record as jet fuel prices fall and ticket prices spike

<img class="gwt-Image" src="/photo/52462066.cms" /><a href="http://www.businessinsider.in/searchresult.cms?query=jet+airways&amp;sortorder=effectivedate">Jet Airways</a>, India's second-biggest airline by passengers, reported an annual profit on Thursday for the first time since 2007 and a year ahead of schedule under its 2014 turnaround plan. 
 
The carrier, part-owned by <a href="http://www.businessinsider.in/searchresult.cms?query=etihad&amp;sortorder=effectivedate">Abu Dhabi's Etihad Airways</a>, said lower fuel costs and higher aircraft use helped it swing to a profit in the year ending on March 31 but warned that growing domestic competition was putting pressure on yields. 
 
For the year, its net profit was a record 12.12 billion rupees ($181 million) compared with a loss of 20.97 billion rupees in the previous year, the company said in a statement. 
 
Jet reported a profit of 4.26 billion rupees for its fourth quarter to the end of March, compared with a loss of 18.03 billion rupees in same quarter a year earlier. 
 
It lowered its debt by 16.8 billion rupees during the year but did not say what the latest debt level was. 
 
The airline would continue to focus on strengthening its balance sheet to sustain growth, <a href="http://www.businessinsider.in/searchresult.cms?query=naresh+goyal&amp;sortorder=effectivedate">Chairman Naresh Goyal</a> said in the statement, although he said competitive and structural challenges remained. 
 
"The induction of capacity and the enhanced competitive scenario is creating a constant pressure on yields," Goyal said. 
 
Jet competes with state-run <a href="http://www.businessinsider.in/searchresult.cms?query=air+india&amp;sortorder=effectivedate">Air India</a> and <a href="http://www.businessinsider.in/searchresult.cms?query=vistara&amp;sortorder=effectivedate">Vistara</a> - a joint venture of Tata Group and Singapore Airlines - in the so-called full-service category in a domestic market dominated by low-cost carriers. 
 
InterGlobe Aviation Ltd's <a href="http://www.businessinsider.in/searchresult.cms?query=indigo&amp;sortorder=effectivedate">IndiGo</a> is India's top carrier with 38.7 percent of the market as of April. 
 <keyword id="6358200" type="CITY" weightage="20" keywordseo="Jet-Airways">Jet Airways</keyword>' market share was 18.9 percent in April, down from 23.1 percent a year ago, according to government data. 
 
(Image: BCCL)

Jet Airways posts first annual profit after 8 years

<img class="gwt-Image" src="/photo/51454487.cms" /> 
Boeing and Airbus expect Indian airlines to order up to 1,740 jets over the next 20 years, as aircraft manufacturers eye one of the world's fastest-growing aviation markets to offset any weaker sales elsewhere. 
 
Boeing said on Thursday falling fuel prices, increasing numbers of Indians wealthy enough to travel by air and improved airport infrastructure would boost orders. 
 
The company expects airlines to buy 1,740 planes worth $240 billion by 2034, its senior vice president for Asia-Pacific and India sales, Dinesh Keskar, said at an event at this week's <keyword id="348750" type="COMPANY" weightage="100" keywordseo="Indian-aviation">Indian Aviation</keyword> air show in the southern city of Hyderabad. 
 
Airbus, at the same event, forecast India would require more than 1,600 passenger and freighter aircraft, three-quarters of them narrowbody jets, over the next 20 years, worth $224 billion of business. 
 
"India's growth can help offset the slowdown in other parts of the world," Boeing's Keskar told Reuters. 
 
Aircraft executives are looking to India to support sales after global economic uncertainty overshadowed recent aviation shows in Singapore and Dubai, raising worries about a slowdown in orders. 
 
However, planemakers meeting in Singapore last month defied industry sceptics, saying an unprecedented expansion in the aerospace industry was into its eighth year, supported recently by low oil prices. 
 
BUDGET AIRLINES 
 
Indian budget carrier SpiceJet Ltd is in talks with Airbus and Boeing to buy about 100 planes, worth about $11 billion at list prices. 
Boeing is keen to clinch the order to keep a foothold in the low-cost Indian carrier market, while a win for Airbus would cement its position as the country's dominant supplier of narrowbody planes. 
 
"Airbus is being very aggressive and I don't blame them. We have a relationship with SpiceJet that dates back to 2002. We have worked with them in good and bad times," said Boeing's Keskar. 
 
InterGlobe Aviation Ltd's IndiGo finalised the purchase of 250 A320neo aircraft in August, handing Airbus its largest-ever order by number of planes. Other airlines are also looking to grow their fleets to win more of the fast-growing sector. 
 
Consultants KPMG and the Federation of Indian Chambers of Commerce and Industry said in a report released on Thursday that India was on course to become the world's third-largest aviation market by 2020, six years ahead of a prediction made by the International Air Transport Association last year. 
 
The number of Indian passengers has jumped more than 20 percent in the past year. India's biggest airlines including SpiceJet, Jet Airways (India) Ltd IndiGo and GoAir, largely money-losing until this year, are now profitable as the outlook for the market improves. 
 
"We are confident about the India forecast because of economic growth, middle class growth and airlines are doing well. There is a relatively low number of aircraft compared to other emerging markets," Airbus' Head of Marketing in Asia Joost Van Der Heijden told reporters in Hyderabad. 
 
<a href="http://www.airbus.com/fileadmin/_processed_/csm_A318_CFM_AIRBUS_V10_300dpi_c09cf1d67f.jpg">Image source</a>

Weaker international sales drive Boeing and Airbus to India’s growing aviation market

<img class="gwt-Image" src="/photo/49753937.cms" />The spectacular debut of <a href="http://www.businessinsider.in/searchresult.cms?query=indigo">IndiGo</a> , India's biggest airline by market share, on the bourses on Tuesday, not only reflected investor’s confidence in India’s potential as one of the world's fastest growing aviation markets but a possible resurgence of the primary market after a prolonged lull. This was despite a premium valuation at around $4 billion (it is twice as valued compared with the combined valuation of peers Jet Airways and SpiceJet). 
 
For a perspective, InterGlobe Aviation Ltd, which runs the carrier, raised $453.52 million last month through its initial public offering, which was the largest IPO since telecom tower firm Bharti Infratel Ltd raised $750 million in December 2012. 
 
IndiGo’s blockbuster market entry is a sharp contrast to the debut of Coffee Day Enterprises Ltd (that runs India’s largest cafe chain Cafe Coffee Day) as it struggled to sail through and revive hopes that the <a href="http://www.businessinsider.in/searchresult.cms?query=ipo+market">IPO market</a> in India is finally turning around. 
 
Last two years have been a dismal period for the primary market in the country, reflecting the lack of momentum that prevailed across the broader market prior to the Narendra Modi-led Indian government assumed power. 
 
The lacklustre history of the IPOs, launched in the last decade and underperformed, also proved to be a dampener for investors who have already been skeptical about the slow pace of structural reforms that are needed to revive market sentiments. 
 
Complex listing rules also pulled back companies from tapping the primary market to raise funds—till recently the IPO market was governed by archaic rules that have existed for decades. 
 In addition, companies, especially those in the booming technology sector, have been exploring alternative sources of finance. For example, while e-commerce major <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword> raised more than $1billion from Private Equity investors over the last one year, its close competitor <keyword id="541988" type="COMPANY" weightage="20" keywordseo="SnapDeal">Snapdeal</keyword> raised close to $1billion. Ola, India’s leading taxi-hailing app, which raised roughly $650 million from Private Investors recently, is another example of next-generation technology-driven startups that are tapping the PE source of funding for growth. 
 
However, the prospects of the IPO market seem to be changing. More than a dozen companies have filed draft papers with markets regulator <a href="http://www.sebi.com/">SEBI</a> for public offers since the new government took charge at the Centre in May 2014. Besides, many companies, which scrapped their IPO plans earlier due to bad market conditions, have been keen to make another attempt to enter the capital markets. 
 
These translated in to a modest uptick in IPOs during 2015, after two years when the primary markets were almost dead. Though the money raised through IPOs this year is small compared with $8 billion raised in 2010, the last time Indian primary markets really took off. But, it is believed to be a trigger for more sizable IPOs going ahead. 
 
The renewed confidence of investors, especially FIIs, after the <a href="http://www.businessinsider.in/searchresult.cms?query=Modi">Modi</a> government took over contributed to the revival of the secondary market—where investors trade previously issued securities—which peaked over a year since BJP came to power and thus provided fodder for an uptick of the primary market as well. 
 
Of course, the markets are seeing a correction—bench market indices BSE Sensex and Nifty lost more than 10% over two months—driven by the slower growth numbers reported by China. 
 
However, India’s long-term story remains intact as it can turn China’s pain into its gain as an alternative investment destination for large FIIs. 
India continues to be among the most favoured by emerging market investors given the country's strengthening macro fundamentals. Though concerns over the economy as well as cultural tolerance have risen recently, they haven't hampered investor sentiment significantly. 
 
Also, as indicated by the government’s move on Tuesday to further relax FDI norms in over 15 sectors, including defence, realty and broadcasting, the policy initiative to bring in structural reforms is still well on track. Therefore, the chances of a continued revival of the primary market are bright. 
 
The IPO activity is expected to gain more momentum driven by the enhanced need for the companies to go beyond the Private Equity route to raise capital for growth and expansion. Many companies and investors are also turning to the IPO route as a preferred option for generating liquidity. 
 
The renewed interest in IPOs is also driven by private-equity backed firms which are capitalising on the positive market sentiment to provide an exit for their investors. 
 
According to Dealogic, Indian companies have raised around $1.03 billion via IPOs so far this year, well above the $282 million for all of last year and $295 million in 2013. More companies in sectors such as banking and financial services, technology, logistics and pharma are expected to tap primary markets in the near future. 
 
While size of the IPOs raised in India remain relatively small compared with those seen in the US or other Asian financial capitals such as Hong Kong and Tokyo, the uptick in the primary market proves that activity seen by the secondary markets after May 2014 is not just an aberration and strengthens India’s status as a preferred investment destination amid shades of gloom elsewhere, including China. 
 
(Image: Thinkstock)

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Indigo might have to wait another six months before it gets back to profitability

Bhakti Makwana

Indigo reports highest-ever quarterly revenue of ₹130 billion

IANS

BSE seeks clarification from Indigo on seeking compensation from Airbus

BI India Bureau

Indigo raises Rs 3,010 crore in IPO

BI India Bureau

Sebi probe suggests prima-facie violations of norms in IndiGo related party transactions; shares plunge

PTI

IndiGo airline's profit hits a new record as jet fuel prices fall and ticket prices spike

Sriram Iyer

Jet Airways posts first annual profit after 8 years

Reuters

Weaker international sales drive Boeing and Airbus to India’s growing aviation market

The primary Indian market is gaining momentum and it is not an aberration. Here’s why

Preetam Kaushik