IndiGo shares fall 4% after ₹3,689 crore block deal
What's the story
InterGlobe Aviation, the parent company of IndiGo, saw a 4% drop in its shares following a significant block deal on Tuesday.
The deal involved 83.7 lakh shares, representing a 2.2% stake in the company, and was executed at an average price of ₹4,406 per share.
The total value of the deal amounted to ₹3,689 crore. The parties involved in the transaction have not been disclosed.
Stake reduction
InterGlobe Enterprises reduces stake in IndiGo
The block deal was part of a larger strategy by InterGlobe Enterprises Private, the holding company of the Bhatia family, to reduce its stake in the low-cost carrier.
The Bhatia family, including promoter Rahul Bhatia, previously held a 37.75% stake in InterGlobe Aviation.
This transaction marks the first time in several years that they have sought to reduce their stake in the company.
The deal will also trigger a 365-day lock-in period before further stake sales can occur.
Market impact
Impact of block deal on InterGlobe Aviation's float
Following the block deal, Nuvama Alternative & Quantitative Research estimates that the float in InterGlobe Aviation will increase to 49%, exceeding MSCI's assumed 45%.
This increase is expected to result in an inflow of $53 million, equivalent to one million shares.
Additionally, a minor weight adjustment is predicted in the stock's weightage in the FTSE index, valued at approximately $15 million.
Despite these changes, Nuvama's Head of Research remains optimistic about IndiGo's performance.
Financial performance
IndiGo's robust financial performance in FY24
InterGlobe Aviation reported a record profit of ₹8,172 crore for fiscal year 2024.
In the fourth quarter of FY24 alone, the company achieved a net profit of ₹1,894 crore, up from ₹919.2 crore in the same period last year.
This marked the company's sixth consecutive profitable quarter.
The airline's revenue also saw a 26% year-on-year increase to ₹17,825.3 crore in Q4 FY24.