InterGlobe Aviation, which operates the low-cost IndiGo
airline, will hit the primary market on Tuesday with an aim to raise a
little over Rs. 3,000 crore. India's biggest airline according to market share is aiming at a valuation of over $4 billion (Rs. 26,000 crore) through the initial public offer, being dubbed as India's biggest in three years.
Here are 10 things to know about IndiGo IPO:
1) IndiGo shares, with a face value of Rs. 10, can be bought in a price band of Rs. 700 to Rs. 765. Shares can be bought in multiples of 15. The IPO will close for subscription on October 29.
2) The IndiGo IPO comprises fresh issue of shares worth Rs. 1,270 crore. Promoters and non-promoters are selling shares worth about Rs. 1,750 crore. Together, the share sale can rake in up to Rs. 3,018 crore. Post issue, the promoter holding is expected to come down to 85 per cent from 93.4 per cent currently.
3) IndiGo has a net debt of Rs. 3,912 crore, all of which is related to aircraft purchases, according to President Aditya Ghosh. IndiGo plans to use the proceeds to retire Rs. 1,166 crore of debt, while the remaining amount will be used to fuel expansion, the company said.
4) InterGlobe's net worth (total assets minus total liabilities of a company) slipped to a negative Rs. 139 crore at the end of June 2015. The company, however, says that there is nothing to worry about. "In the first quarter we earned Rs. 7 crore a day net profit. We are now sitting three-and-a-months after that (June 30) and naturally the negative net worth becomes positive net worth," he noted.
5) IndiGo has been the only consistently profitable airline in the country for the last seven years, according to consultancy Centre for Aviation. In the latest June quarter, IndiGo posted a net profit of Rs. 640 crore on sales of Rs. 4,317 crore. For the year ended March 2015, IndiGo recorded a net profit of Rs. 1,296 crore on revenues of Rs. 14,309 crore.
6) IndiGo, which started flying in 2006, has risen rapidly to command almost 40 per cent of its home market - the biggest share of any airline. It also has one of the country's biggest fleets - 98 aircraft at present - allowing it to fly more frequently than other carriers.
7) According to Mr Ghosh, the average age of its fleet is around four years; a young fleet means less fuel is burnt, he added.
8) Shares in listed carriers have rallied sharply in the run-up to IndiGo's IPO. In last one month, SpiceJet shares have rallied 55 per cent while Jet Airways shares have surged over 20 per cent as compared to 5 per cent gain in the broader Nifty.
9) According to Angel Broking, IndiGo is a low-cost carrier (LCC) with an asset light business model which enables it to have lowest cost and highest profitability amongst Indian airline companies. The brokerage has a "subscribe" rating on IndiGo IPO. Anand Rathi brokerage also asked investors to "subscribe" to the IPO citing Indigo's market leadership, cost competitiveness, and low-cost carrier business model.
10) Some investors, however, said the pricing was on the high side. "Even though IndiGo is doing well and it is the country's most profitable airline, the pricing for this issue is a bit aggressive," said Neeraj Dewan, director at brokerage Quantum Securities.
Here are 10 things to know about IndiGo IPO:
1) IndiGo shares, with a face value of Rs. 10, can be bought in a price band of Rs. 700 to Rs. 765. Shares can be bought in multiples of 15. The IPO will close for subscription on October 29.
2) The IndiGo IPO comprises fresh issue of shares worth Rs. 1,270 crore. Promoters and non-promoters are selling shares worth about Rs. 1,750 crore. Together, the share sale can rake in up to Rs. 3,018 crore. Post issue, the promoter holding is expected to come down to 85 per cent from 93.4 per cent currently.
3) IndiGo has a net debt of Rs. 3,912 crore, all of which is related to aircraft purchases, according to President Aditya Ghosh. IndiGo plans to use the proceeds to retire Rs. 1,166 crore of debt, while the remaining amount will be used to fuel expansion, the company said.
4) InterGlobe's net worth (total assets minus total liabilities of a company) slipped to a negative Rs. 139 crore at the end of June 2015. The company, however, says that there is nothing to worry about. "In the first quarter we earned Rs. 7 crore a day net profit. We are now sitting three-and-a-months after that (June 30) and naturally the negative net worth becomes positive net worth," he noted.
5) IndiGo has been the only consistently profitable airline in the country for the last seven years, according to consultancy Centre for Aviation. In the latest June quarter, IndiGo posted a net profit of Rs. 640 crore on sales of Rs. 4,317 crore. For the year ended March 2015, IndiGo recorded a net profit of Rs. 1,296 crore on revenues of Rs. 14,309 crore.
6) IndiGo, which started flying in 2006, has risen rapidly to command almost 40 per cent of its home market - the biggest share of any airline. It also has one of the country's biggest fleets - 98 aircraft at present - allowing it to fly more frequently than other carriers.
7) According to Mr Ghosh, the average age of its fleet is around four years; a young fleet means less fuel is burnt, he added.
8) Shares in listed carriers have rallied sharply in the run-up to IndiGo's IPO. In last one month, SpiceJet shares have rallied 55 per cent while Jet Airways shares have surged over 20 per cent as compared to 5 per cent gain in the broader Nifty.
9) According to Angel Broking, IndiGo is a low-cost carrier (LCC) with an asset light business model which enables it to have lowest cost and highest profitability amongst Indian airline companies. The brokerage has a "subscribe" rating on IndiGo IPO. Anand Rathi brokerage also asked investors to "subscribe" to the IPO citing Indigo's market leadership, cost competitiveness, and low-cost carrier business model.
10) Some investors, however, said the pricing was on the high side. "Even though IndiGo is doing well and it is the country's most profitable airline, the pricing for this issue is a bit aggressive," said Neeraj Dewan, director at brokerage Quantum Securities.
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