On June 14, InterGlobe Aviation’s shares rose over 1% in early trade, buoyed by the company’s growth prospects amid an uptick in demand following the sudden grounding of rival Go Air.

The sudden halt in Go Air’s operations amid the company’s bankruptcy crisis led to a demand rise and a sudden jump in InterGlobe Aviation. In addition, the fuel prices decline boosted growth prospects for the low-cost carrier.

According to Nuvama Institutional Equities, IndiGo and Air India may flourish in an industry structure dominated, creating a duopoly. The recent shutdown of Go Air caused market disruption and could positively impact airfares, chiefly considering the present robust traffic trends.

At 9:24 am, InterGlobe Aviation shares were trading at Rs 2,359, up 1% on the NSE.

Global research and brokerage firm Goldman Sachs witnessed healthy growth for the airline as it benefited from a rival’s fall. “Robust traffic, advanced market share and lower fuel prices are probable to drive ‘RASK (Revenue per available seat kilometre)-CASK (Cost per available seat kilometre)’ for the low-cost carrier,” Goldman Sachs reported.
However, the brokerage believes the market share rise will be far stickier and improve InterGlobe’s passenger load factor (PLF) and profitability.

Goldman Sachs gave its ‘buy’ call for the low-cost airline, with a price target of Rs 2,730. The bullish price target rose around 17% from Tuesday’s closing price.

Meanwhile, a new credit rating agency ICRA report presented that the projected domestic air passenger traffic reached about 131.8 lakh for May, reflecting a 2.3% increase from around 128.9 lakh recorded in April. Compared to the same month last year, there was a growth of about 15% YoY.