ICRA downgrades long-term rating on Indigo; maintains negative outlook

ICRA has downgraded its long-term rating on InterGlobe Aviation to [ICRA] A from [ICRA] A+, while the outlook remains negative.

Aug 18, 2021 10:08 IST capital market

The ratings agency has, however, reaffirmed the companys short-term rating at [ICRA] A1.

Indigo said that ICRA has acknowledged the companys strong market position, cost competitiveness and healthy liquidity profile amongst its peers but attributed the downgrade to prolonged disruption caused by the COVID-19 pandemic on the companys financials.

ICRA expects the Indian airline industry to remain adversely impacted in the near-term and recovery in passenger traffic and yields to be gradual. In line with the industry, profitability of the company is also vulnerable to volatility in fuel prices and foreign exchange.

Despite the fact that the aviation industry is going through an unprecedented crisis, the companys balance sheet remains strong. The company ended Q1 FY2022 with a total cash balance of Rs 17,068 crore, including a free cash balance of Rs 5,621 crore.

The company continues to make all its payments including lease related payments and service its debt on time. Regardless of all the challenges, the companys focus throughout the pandemic has been to manage its cash levels, improve its cost structure, run a high-quality airline with highly engaged employees and position itself for the future.

IndiGo is amongst the fastest growing low-cost carriers in the world. The airliners consolidated net loss stood at Rs 3,174.18 crore in Q1 FY22, higher than net loss of Rs 2,844.29 crore in Q1 FY21. Net sales surged 292.2% to Rs 3,006.91 crore in Q1 FY22 over Rs 766.74 crore in Q1 FY21.

The scrip shed 0.32% to currently trade at Rs 1698.35 on the BSE.

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