Stock Picks: InterGlobe Aviation Ltd

InterGlobe Aviation Ltd (IndiGo) is the leader in the Indian domestic airlines industry with a market share of 42.6% in 2016. Indigo serves 36 destinations across India and 5 international destinations in Southeast Asia and the Middle East. The company has 109 aircrafts and employs over 12,360 professionals across regions.

Key Facts:
– Indigo adopted the most successful Low Cost Carrier (LCC) model
– 90% of its revenue comes from domestic operations
– Most profitable airline in the country. Indigo posted the highest ever annual profit of Rs. 1990 crore in FY16
– Indigo’s main competitors include Spice Jet, Go Air, Jet Airways and Air India
– All of the 100 A320 planes (narrow body) ordered in 2005 have been delivered
– Indigo ordered 180 A320neo planes in year 2011 and 250 more in 2014, the largest order among LCCs globally. The company expects to receive all 430 A320neos by 2022
– Highest load factor of 77% for the last 7 years, i.e. carries more passengers on its plane
– Its planes make more trips per day than any other airline in the country because of its best turnaround time of 30 mins
– Only airline in the world that uses step-less ramps for entry and exit in its planes – this makes it easy for customers to embark and carry their luggage which ensures on-time performance
– 42% of Indigo’s workforce comprises women and 12% of Indigo’s pilots are women

Management:
– Mr. Rakesh Gangwal, promoter of Indigo, has over 32 years of experience in the aviation industry. He has previously worked as CEO of US Airways. He has also held executive management positions at United Airlines and Air France
– Mr. Gangwal is a mechanical Engineer from IIT, Kanpur and an MBA from Wharton
– Mr. Rahul Bhatia, promoter of Indigo, has 25 years of experience in the travel industry. His understanding of the Indian travel industry and customer behaviour is unique
– Mr. Bhatia holds a degree in electrical engineering from the University of Waterloo in Ontario, Canada
– Mr. Aditya Ghosh is the president and whole time director of Indigo. He heads all operations and management of Indigo. He has been with the company since 2008
– Attrition rate is one of the lowest in the industry
– The management is good at capital allocation
– High dividend payout
– Able and good management

Investors:
– Mr. Bhatia & Family holds 43% of the company
– Mr. Gangwal & Family holds 43% of the company
– FIIs hold close to 5.2% of the company
– Mutual Funds hold close to 1.8% of the company

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