IndiGo Block Deal: For the first time since the IPO, the Bhatia Family is divesting their stake in IndiGo. According to BSE filings, Rahul Bhatia, a promoter of the company, currently holds a 37.91% stake through InterGlobe Enterprises as of March 2024. Post the block deal, there will be a seller lock-up period of 365 days.

In the Bhatia family’s first post-IPO stake sale, IndiGo promoters have reportedly divested around 2% of the airline’s shares today, fetching approximately Rs 3,700 crore in a block deal. This transaction led to a decline of around 3% in the stock’s value.

During the block window, a significant deal involving 83.7 lakh shares of InterGlobe Aviation took place, with shares changing hands at a price of Rs 4,406 per unit.

This marks the initial instance of the Bhatia family selling their stake in InterGlobe Aviation following the IPO. According to BSE filings, as of March 2024, Rahul Bhatia, a company promoter, held a 37.91% stake through InterGlobe Enterprises.

Post the block deal, there will be a lock-up period of 365 days for the seller, as indicated by a term sheet issued by the deal’s bankers.

Reports suggest that the promoter group intends to funnel the proceeds into the hospitality sector, aiming primarily to expand its presence in Europe.

In December of the previous year, InterGlobe Enterprises announced the launch of a new lifestyle hotel brand, Miiro, planning a collection of uniquely designed hotels across European cities. The chain is set to debut this summer in Paris and Barcelona, with further expansion into other European markets in the pipeline.

Following the significant deal, shares of the airline company witnessed a drop of up to 4.4%, trading at Rs 4,361 on the BSE and showing around a 4% decrease at 11:16 am.

Trendlyne data reveals that out of 20 analysts covering the stock, 16 recommend buying, while the remaining four suggest holding.

Kotak Institutional Equities, a domestic brokerage, recently raised the target price from Rs 5,100 to Rs 5,700, considering the potential for IndiGo to return to its historical peak of spreads over FY2026-27.

“Recent statements from industry experts suggest that most competitors to IndiGo are likely to face another year of significant losses in FY2025 and won’t witness a substantial increase in aggregate supply during this period. A major competitor has indicated that current pricing levels do not adequately account for cost inflation. We project a 2% increase in yields over the next three years despite a 6% decline in crude prices compared to the FY2024 base, in line with current ATF prices in Delhi,” stated Kotak.