CMP: INR974 TP: INR1,057 (+9%) Downgrade to Neutral

Transcription

1 BSE SENSEX S&P CNX 28,003 8,637 Motilal Oswal values your support in the Asiamoney Brokers Poll 2016 for India Research, Sales and Trading team. We request your ballot. Bloomberg INDIGO IN Equity Shares (m) M.Cap.(INRb)/(USDb) / Week Range (INR) 1,396 / 702 1, 6, 12 Rel. Per (%) -7/1/- Avg Val, INR m 2,538.2 Free float (%) 13.9 Financials & Valuations (INR b) Y/E Mar E 2018E Net Sales EBITDAR PAT EPS (INR) Gr. (%) BV/Sh (INR) RoE (%) RoCE (%) P/E (x) P/BV (x) Estimate change TP change Rating change Quarterly Performance (Consolidated, INR m) 2 August 2016 Results Update Sector: Aviation InterGlobe Aviation CMP: INR974 TP: INR1,057 (+9%) Downgrade to Neutral Below est; competitive headwinds impacting yield; downgrade to Neutral Indigo s revenues at INR45.8b (est INR48.2b; +9% YoY, +12% QoQ) was 5% below est. led by (a) RPK at 10.6b (est 10.9b; +19% YoY, +9% QoQ) and (b) yield at INR4.33 (est 4.4; -8% YoY, +2% QoQ). EBITDA was below est. at INR8.2b (-16.2% YoY, 1.3% QoQ), with EBITDA margin of 17.8% vs 23.1% in and 19.7% in. PAT below est; load factors decline: PAT stood at INR5.9b (v/s est of INR6.9b; -8% YoY, +2% QoQ). Reported interest cost was higher at INR1.2b (~4x YoY and QoQ led by IndAS restatement); while tax rate was lower at 20.7%. (v/s ~30% earlier). Load factors stood at 83.3% in vs 87.9% in and 85.1% in. ASK increased to 12.7b in (+25.1% YoY, +11.8%QoQ). RPKs increased to 10.6b in (+18.5% YoY, +9.4%QoQ). disappoints due to competitive pressure: We are disappointed by the yield pressure in the backdrop of continued high industry load factors. RASK decline of INR0.54 YoY is more than fuel cost per ASK decline of INR0.25 YoY, implying competitive pressure. FY17 end fleet guidance maintained; creating concerns on load factor: Indigo reiterated its FY17 ASK guidance growth of 34% and expects to end FY17 with a fleet of 24 A320 Neos (18% of total). However, we note that the sustained low oil price is strengthening airlines balance sheets and emboldening competition to announce fleet expansion. Though Indigo continues to be the most cost efficient low-cost player, consistent fleet induction could further suppress load factors and yields, in our view, in the near term. Valuation and View: We cut our FY17/FY18 EPS by ~7% primarily led by ~2% cut in our yield assumptions as we believe that Indigo s new stance to respond actively to competitor s pricing could result in sacrificing profitability in the near term. The stock trades at 12.9x our FY18 EPS of INR76 and at 7.7x adj. FY18 EV/EBITDAR. We value Indigo at 14x FY18 (v/s 17x earlier) to arrive at a fair value of INR1,057, implying 9% upside. Downgrade to Neutral. Harshad Borawake (HarshadBorawake@MotilalOswal.com); Rajat Agarwal (Rajat.Agarwal@MotilalOswal.com); Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on Bloomberg, Thomson Reuters, Factset and S&P Capital.

2 Key takeaways from results concall Management hints at change in stance towards competition and pricing: IndiGo management highlighted that earlier they were largely passive towards low competitive fares on key routes. However, the management hinted that they are might become more aggressive in responding to competitive pressures going ahead. Management highlighted that yields were lower YoY due to competitive headwinds. IndiGo continues to look at India as a highly attractive market and is confident that the market can profitably absorb additional capacity. Regards to concerns of saturation, management said that while certain airports were reaching saturation, management is continuing to optimize its network to absorb additional capacity. Maintaining FY17 fleet addition guidance (had indicated 34% YoY ASK addition) IndiGo management highlighted that they are maintaining their FY17 fleet guidance. Last quarter it had guided for 34% YoY ASK addition. Expects to get in all 24 neo planes by march 2017 (currently have a 5). However, the deliveries will be slowed down to give Pratt & Whitney time to catch up with the delivery schedule. Management indicated that they are facing operational issues in neo which include some software hiccups. For, management guides ASK growth of 25%. The management updated that A320Neos have proven to be 14.5% fuel efficient (vs. A320Ceos). Rentals on neos are ~15% higher than ceo planes. performance Added 2 aircraft in 1Q (including 1 A320NEo). End fleet size was 109 Interest expenses for the quarter included a one-off of INR440m due to redelivery of airplane which resulted in renegotiation of ECB financing Employee costs included INR210m related to issue of ESOPs. Management highlighted that the excess bench strength earlier is being absorbed now with the delivery of planes. Employee to aircraft has declined from 121 in to 112 in. Management guided that tax rate was lower during the quarter due to a writeback of tax credit which had been written off earlier. Going ahead management guided normalized tax rates. 2 August

3 Exhibit 1: EBITDAR at INR15.3b (-3% YoY and +2% QoQ), PAT at INR5.9b (-7.6% YoY, +2% QoQ) FY16 FY17 Key operating metrics 3Q 4Q 1Q 2Q 3Q 4Q 1Q YoY (%) QoQ (%) ASK (billions) % 11.8% RPK (billions) % 9.4% Load factor (%) % -2.1% Passengers ('000) 6,530 7,185 8,211 7,630 8,334 8,930 9, % 10.3% Income statement (INRb) Passenger ticket revenue % 12.4% Ancillary revenue % 9.1% Total Revenue % 11.9% Ticket revenue (INR/RPK) % 2.7% Blended (INR/RPK) % 2.3% Avg. Fare (INR) 5,264 4,664 4,524 3,997 4,516 3,958 4, % 1.9% Fuel Cost % 33.6% Employee Expenses % -2.9% Other Expenses % 12.7% Total Expenditure % 18.0% EBITDAR % 1.5% Gross lease rentals % 2.7% Less: Benefits % 9.2% Net Lease Rentals % 1.8% EBITDA % 1.3% Interest % 332.6% Depreciation % -7.5% Other Income % 3.6% PBT % -7.9% Tax % -33.1% PAT % 2.2% Exhibit 2: EBITDAR per ASK at INR1.20 (-22.4% YoY, -9.2% QoQ), net rentals per ASK at INR0.56 (-5.3% YoY, -8.9% QoQ) FY16 FY17 Income statement (INR/ASK) 3Q 4Q 1Q 2Q 3Q 4Q 1Q YoY (%) QoQ (%) Revenues % 0.2% Fuel Cost % 19.5% Employee Expenses % -13.1% Other Expenses % 0.8% Total Non-fuel Expenses % -3.6% Total Expenditure % 5.6% EBITDAR % -9.2% Gross lease rentals % -8.1% Less: Benefits % -2.3% Net Lease Rentals % -8.9% EBITDA % -9.4% Interest % 287.1% Depreciation % -17.3% Other Income % -7.3% PBT % -17.6% Tax % -40.1% PAT % -8.6% 2 August

4 Exhibit 3: IndiGo has continued to gain market share in the last two quarters primarily at the expense of Jet India Competitive Landscape Domestic pax share (%) IndiGo Jet Airways Air India SpiceJet GoAir Others 1Q Q Q Q Q Q Q Q Domestic RPK share (%) IndiGo Jet Airways Air India SpiceJet GoAir Others 1Q Q Q Q Q Q Q Q Domestic ASK share (%) IndiGo Jet Airways Air India SpiceJet GoAir Others 1Q Q Q Q Q Q Q Q Domestic load factors IndiGo Jet Airways Air India SpiceJet GoAir Others 1Q NA 2Q NA 3Q NA 4Q NA 1Q NA 2Q NA 3Q NA 4Q Source: DGCA, MOSL 2 August

5 Exhibit 4: Total ASKs increased to 12.7b in Total ASKs (billions) Exhibit 5: ASKs increased at 25.1% YoY in ASK growth YoY (%) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Source: DGCA, Company, MOSL Source: DGCA, Company, MOSL Exhibit 6: Total RPKs (billions) increased to 10.6b in Total RPKs (billions) Exhibit 7: Total RPKs increased at 18.5% YoY in RPK growth (YoY %) Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Source: DGCA, Company, MOSL Source: DGCA, Company, MOSL Exhibit 8: Load factor declined YoY to 83.3% in (vs. 87.9% in and 85.1% in ) Total Load Factors (%) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Source: DGCA, Company, MOSL 2 August

6 Exhibit 9: Average passenger yields declined YoY to INR3.8 in Exhibit 10: Fuel costs declined YoY to INR1.1 in due to lower ATF prices Fuel Cost Exhibit 11: EBITDAR/ASK declined to INR1.20 in (vs INR1.55 in ) driven by lower yields Source: DGCA, Company, MOSL Exhibit 12: Lease rentals (INR/ASK) declined YoY and QoQ to INR0.56in Exhibit 13: EBITDA (INR/ASK) declined to INR 0.64 in vs INR0.96 in Exhibit 14: EBITDAR margins (%) declined to 33.4% in due to higher other operating expenses August

7 Exhibit 15: EBITDA margins (%) decline YoY in to 17.8% from 23.1% in Exhibit 16: PAT margins (%) declined YoY in to 12.9% from 15.2% in Exhibit 17: RASK declined to INR3.6 in from 4.1 in Exhibit 18: CASK declined to INR3.02 in from INR3.24 in Exhibit 19: Continued low oil prices emboldening airlines to announce fleet additions On Fleet additions GoAir AirAsia India Air India Ordered additional 72 A320Neos; outstanding order book increases to 142. New international destinations "will occupy the aircraft in the years to come and keep us busy" - Prock Schauer, CEO, GoAir AirAsia (parent of AirAsia India), ordered 100 A321 Neos. We believe that a few of these A321Neos ( seats v/s A320Neos seats) would be leased down to AirAsia India. To induct 100 new aircraft to replace and expand fleet, according to the new turnaround plan. Current performance indicates that Air India will be able to repay aircraft-related debt by Vistara Management's stated strategy is to avoid unsustainable fare war and over-expansion. "Vistara will neither engage in unsustainable flash sales of air tickets nor opt for over-aggressive expansion. Thoughtful, measured expansion and pricing is our hallmark, - Sanjiv Kapoor, Chief Strategy and Commercial Officer, Vistara Source: DGCA, MOSL Exhibit 20: IndiGo sensitivity to key parameters Parameter Unit change FY17E FY18E Yield (%) 1 % change ~5.0% ~7.3% Load factor (%) 1 % change ~6.0% ~8.7% Oil Price (USD/bbl) USD1/bbl change ~2.1% ~3.0% Fx rate (INR/USD) INR 1/ USD change ~3.0% ~4.5% Source: DGCA, Company, MOSL 2 August

8 Exhibit 21: IndAS overall impact largely muted for Indigo except for changes in interest and lease rentals FY16 Y/E March Earlier Restated Chg (%) Earlier Restated Chg (%) Earlier Restated Chg (%) Net Sales 42,115 42, % 40,907 40, % 161, , % Fuel Cost 13,477 13, % 10,236 10, % 47,793 47, % Employee Expenses 3,825 3, % 4,932 4, % 17,899 17, % Other Expenses 9,072 9, % 10,689 10, % 39,560 39, % EBITDAR 15,741 15, % 15,049 15, % 56,147 56, % Lease Rentals 6,017 5, % 6,999 6, % 26,122 25, % EBITDA 9,724 10, % 8,050 8, % 30,025 31, % EBITDA margin 23.1% 23.9% 19.7% 20.3% 18.6% 19.3% Interest % % 1,319 3, % Depreciation 1,200 1, % 1,242 1, % 5,031 5, % Other Income 1,057 1, % 1,569 1, % 4,614 5, % PBT after EO Exp 9,253 9, % 8,108 8, % 28,290 28, % Total Tax 2,848 2, % 2,315 2, % 8,392 8, % Effective Tax rate (%) Reported Profit After Tax 6,404 6,389 5,793 5,838 19,897 19,862 Exhibit 22: Reconciliation of IndAS changes FY16 PAT as per IGAAP 6,404 5,793 19,897 Gain on discounting of long term financial assets and liabilities ,082 Loss on unwinding of discounted long term financial assets and liabilties Gain/(loss) arising on fair value accounting of financial asserts Actuarial variation of defined benefit plans reclassfied in other comprehensive income (315) (274) (1,250) (26) (12) 9 19 Deferred tax on above adjustments 8 (24) 19 PAT as per IndAS 6,389 5,838 19,862 Other comprehensive income (net of tax) 8 (6) (13) Total comprehensive income as per IndAs 6,397 5,832 19,849 2 August

9 Valuation and View Pricing strategy change could impact premium: Indigo s superior economics versus peers should lead to premium valuation. However, management s recent admission that it has/intends to respond to competitor s fares, indicates change in its pricing stance. This coupled with its planned capacity addition will put pressure on load factors as well as yields in the near term. High growth/low oil revive industry-wide fleet addition plans: Sustained low oil price is strengthening airlines balance sheets and emboldening competition to announce fleet expansion. As we enter 2Q (the weakest quarter seasonally), fare wars are likely to peak before moving on to 3Q (the strongest quarter). (refer our detailed report dated July 25, 2016). Key things to watch out: Through the cycles Indigo has proved its resilience by consistently posting profits. However, in the near term we would watch out for (a) impact on profitability led by fare war, (b) capacity additions by competition and (c) dividend payout. Valuation and view: We cut our FY17/FY18 EPS by ~7% led by ~2% cut in our yield assumptions as we believe that Indigo s new stance to respond actively to competitor s pricing could result in sacrificing profitability in the near term. The stock trades at 12.9x our FY18 EPS of INR76 and at 7.7x adj. FY18 EV/EBITDAR. We value Indigo at 14x FY18 (~20% premium to global LCC s; and v/s 17x earlier) to arrive at a fair value of INR1,057 implying 9% upside. Downgrade to Neutral. Exhibit 23: Indigo Key assumptions Y/E March FY16 FY17E FY18E Fleet and capacity Fleet size (No) ASK (millions) 12,491 18,006 24,977 29,967 35,327 42,825 56,255 70,677 YoY (%) 44% 39% 20% 17.9% 21.2% 31.4% 25.6% Load Factor 85% 82% 81% 77% 79.8% 84.0% 82.7% 83.4% RPK (millions) 10,634 14,826 20,260 23,136 28,177 35,967 46,597 58,946 YoY (%) 43% 39% 37% 14% 22% 28% 29.6% 26.5% Revenue Calculation 2.6 Ticket Revenue (INRm) 33,910 49,873 82,667 99, , , , ,301 Yield (INR/RPK) Ancillary revenues 4,424 5,774 9,365 11,926 16,314 20,773 27,572 34,100 Total Revenue (INR mn) 38,334 55,647 92, , , , , ,401 YoY (%) 45% 65% 21% 25% 16% 29% 31% Fuel Cost Exchange rate (INR/USD) Brent Price (USD/bbl) ATF Prices (INR/ltr) YoY (%) 33% 11% 7% -10% -30% % Avg. aircraft utiliz. (block hours / day) Fuel (litres / block hour) 2,535 2,513 2,475 2,445 2,373 2,284 2,211 2,278 Aircraft fuel expenses (INR m) 15,213 28,736 43,126 55,134 57,485 47,793 65,765 94,300 2 August

10 InterGlobe Aviation: Story in charts Exhibit 24: India aviation underpenetrated despite the last decade domestic passenger CAGR of 12% Annual domestic seats per capita (2014) Exhibit 25: Domestic aviation: Demand follows supply; RPK growth at 2.3x real GDP growth Domestic ASK (YoY %) Domestic RPK (YoY %) India Brazil Thailand China Norway USA Japan (12) FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY16 Source: CAPA, Company, MOSL Exhibit 26: India to be the 3rd largest aviation market by FY Source: DGCA, MOSL Exhibit 27: Like globally, value migrating to LCCs even in India Low cost carriers Full service carriers % 54% 50% 39% 37% 38% FY16 FY20 FY25 FY16 FY20 FY25 Domestic passengers (m) International passengers (m) Source: Industry, Company, MOSL Exhibit 28: IndiGo, the market leader to benefit most from this trend IndiGo Air India Jet Airways SpiceJet GoAir AirAsia Vistara Share on basis of future fleetsource: Industry, Company, MOSL 41% 46% 50% 61% 63% 62% FY10 Source: DGCA, CAPA, Company MOSL Exhibit 29: Indigo has >50% market share in non-metro destinations IndiGo Jet Airways Air India SpiceJet Go Air Others Top 10 Metro to Metro routes Top 10 Metro to Non-metro routes Top 10 Non-metro to Non-metro routes Source: DGCA, CAPA, Company, MOSL 2 August

11 Financials and Valuations Exhibit 30: Continued profitability indicates focus on cost Exhibit 31: Lowest-cost proposition makes it the most Income controls Statement profitable Indian airline (INR Million) Y/E Mar E 2018E FY09 FY10 Maintenance Fuel Rentals Operations Total Cost Net Sales 38,334 55,647 92, , , , , ,401 Change IndiGo (%) Yes Yes Yes Yes 0.0 Yes 45.2 Yes Yes EBITDAR SpiceJet No Yes Yes 11,217 No No 8,496 No No 22,498 21,769 38, ,147 67,296 84, EBITDAR Jet Margin (%) No No No No No No No EBITDA Airways 7, , , , , , ,266 EBITDA GoAir Margin No (%) No Yes No 18.6 Yes Yes 0.9 Yes Depreciation Air India No No No No 629 No No 665 No , , , ,956 5, EBIT 6, ,080 2,806 Kingfisher No No No No Ceased Operations , ,994 28,561 33, Interest ,226 1,155 1,319 3,234 1,950 Air India Jet Airways SpiceJet Go Air IndiGo Other Income 1,107 1,440 2,371 3,155 3,946 4,614 6,101 6,175 Source: SAP, Company, MOSL Source: SAP, Company, MOSL Extraordinary items PBT 7, ,873 4,736 18,465 28,290 31,428 37,678 Tax Exhibit 32: Strong fleet orderbook to 1,353 ensure higher -657 market 2,040 Exhibit 33: 15% -9 more 5,424 fuel efficient 8,306 A320neo 8,737 aircraft to form 10,475 share Tax Rate (%) % of FY fleet, giving 29.4 significant 29.4 competitive 27.8 advantage 27.8 Reported PAT 5,795 1,406 7,834 4,744 A320neo 13,042 19,983 22,690 27, Adjusted PAT 5,795 1,406 7,834 4,744 A320 13,042 19,983 22,690 27,203 Change (%) % Improvement in fuel 53.2 consumption Balance Sheet (INR Million) Y/E Mar E 2018E 0 5% Share Capital ,604 3,604 3, % Reserves 684 2, ,547 3,874 3, ,739 18,312 22,596 * Net Worth 1,027 2,433 3, ,217 4,207 0% 1% 18, , ,200 Debt IndiGo SpiceJet Jet Go Air 9,314 Air Costa 10,156 Air India 18,004 33,462 35,884 29,499 19,499 19,499 Deferred Tax Airways FY16 4,091 5,180 FY17 6,123 FY18 7,253 Total Capital Employed 10,333 11,924 22,432 38,208 44,182 53,021 47,537 52,951 *Based on media reportssource: Industry, CAPA, DGCA, Company Gross Fixed Assets 10,057 10,737 20,362 44,505 56,715 60,552 71,608 83,419 Less: Acc Depreciation 1,745 1,877 2,718 4,945 7,955 13,597 18,553 24,367 Exhibit 34: Expect EPS to increase to INR83.2 in FY18 driven Exhibit 35: IndiGo s dividend payout is the highest amongst Net Fixed Assets 8,311 8,860 17,645 39,560 48,760 46,955 53,055 59,052 by fleet additions Global LCCs Capital WIP ,264 1,453 Investments 8,022 5,234 11,383 12, ,168 9, ,741 9, Current Assets 12,852 21,711 29,428 38,759 53,750 73,175 76, , Inventory ,306 1, ,693 2,271 Debtors , ,571 2,024 2, Cash & Bank 7,757 13,088 13,406 11,015 19, ,187 26, ,955 0 Loans & Adv, Others 4,482 7,860 14,814 26,180 31,405 33,150 46,898 61,658 Curr Liabs & Provns 18,853 23,882 36,093 52,826 63,500 77,170 93, ,840 Curr. Liabilities * 12,911 23,537 35,554 47,813 61,449 69,476 83, ,381 Provisions , ,013 2,051 7,694 9,558 11,459 Net Current Assets -6,001-2,170-6,665-14,067-9,751-3,995-16,523-17,295 FY16 FY17E FY18E Asian North America Eurasia & ME Total Assets 10,333 11,924 22,432 38,208 44,182 53,021 47,537 52,951 AirAsia Cebu Air Indigo Southwest JetBlue Excl. dividend tax Source: MOSL WestJet Spirit Allegiant Air Arabia easyjet Norwegian Ryanair Wizz Air 2 August

12 Financials and Valuations Ratios Y/E Mar E 2018E Basic (INR) EPS Cash EPS Book Value DPS Payout (incl. Div. Tax.) Valuation(x) P/E Price / Book Value Adj. EV/EBITDAR EV/EBITDA Dividend Yield (%) Profitability Ratios (%) RoE RoCE RoIC Turnover Ratios (%) Asset Turnover (x) Debtors (No. of Days) Inventory (No. of Days) Creditors (No. of Days) Leverage Ratios (%) Net Debt/Equity (x) Cash Flow Statement (INR Million) Y/E Mar E 2018E Adjusted EBITDA 7, ,936 5,066 18,697 30,025 33,517 39,266 Non cash opr. exp (inc) 768 1,272 2,395 2,991 3,827 4, (Inc)/Dec in Wkg. Cap. 2,600 8,740 9,819 11,309 7,765 3, ,968 Tax Paid -1, ,852-1,076-3,951-5,761-7,795-9,345 Other operating activities ,169-1,892-2,341-2,499-1, CF from Op. Activity 8,720 8,961 17,407 15,950 23,839 30,991 25,528 36,889 (Inc)/Dec in FA & CWIP 1, ,153-23,237-10,171-2,320-10,247-9,458 Free cash flows 10,377 8,630 8,254-7,287 13,668 28,671 15,281 27,432 (Pur)/Sale of Invt -1, ,079-2, Others 1,009 3,078-8,298-7,952 1,313 3,344 6,101 6,175 CF from Inv. Activity 1,218 2,747-17,451-31,189-1,779-1,598-4,147-3,283 Inc/(Dec) in Net Worth -2, , Inc / (Dec) in Debt ,270 13,637 3,817-10,241-10,000 0 Interest Paid ,234-1,950 Divd Paid (incl Tax) & Others ,013-6, ,128-13,271-19,117-22,919 CF from Fin. Activity -2,721-6, ,848-13,081-12,200-32,351-24,869 Inc/(Dec) in Cash 7,217 5, ,390 8,978 17,193-10,969 8,738 Add: Opening Balance 540 7,757 13,089 13,406 11,015 19,994 37,187 26,218 Closing Balance 7,757 13,089 13,406 11,015 19,994 37,187 26,218 34,955 2 August

13 Corporate profile Company description InterGlobe Aviation, operator of IndiGo brand is the largest LCC airline in India with a total domestic passenger share of 36.9% in FY16. IndiGo has one of the largest fleet catering to domestic markets. Its total fleet of ~110 aircraft includes 3 next generation A320Neos. InterGlobe Aviation is the only airline in India to be consistently profitable over the last five years a distinction achieved through its consistent focus on reducing costs. Exhibit 1: Sensex rebased Source: MOSL/Bloomberg Exhibit 2: Shareholding pattern (%) Jun-16 Mar-16 Dec-15 Promoter Public Others Note: FII Includes depository receipts Source: Capitaline Exhibit 3: Top holders Holder Name % Holding Riyaz Haider Peer Mohamed 1.4 NA 0.0 NA 0.0 NA 0.0 NA 0.0 Source: Capitaline Exhibit 4: Top management Name Designation Exhibit 5: Directors Name Name Rahul Bhatia Managing director Anupam Khanna Devadas Mallya Mangalore Aditya Ghosh President Kapil Bhatia Rohini Bhatia Rohit Philip CFO Aditya Ghosh Source: Capitaline *Independent Exhibit 6: Auditors Name BSR & Co Type Statutory Exhibit 7: MOSL forecast v/s consensus EPS MOSL Consensus (INR) forecast forecast Variation (%) FY FY Source: Capitaline Source: Bloomberg 2 August

14 Disclosures This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the report InterGlobe and may distributed Aviation by it and/or its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors on investments in such business. The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting information. Our research professionals are paid on twin parameters of performance & profitability of MOSt. MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest. MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets. Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents. Most and it s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. Most and it s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, SEBI Reg. No. INH Pending Regulatory inspections against Motilal Oswal Securities Limited: SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and adjudge violation of SEBI Regulations; MOSL replied to the Show Cause Notice whereby SEBI granted us an opportunity of Inspection of Documents. Since all the documents requested by us were not covered we have requested to SEBI vide our letter dated June 23, 2015 to provide pending list of documents for inspection. List of associate companies of Motilal Oswal Securities Limited -Click here to access detailed report Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues Disclosure of Interest Statement INTERGLOBE AVIATION Analyst ownership of the stock No Served as an officer, director or employee - No A graph of daily closing prices of securities is available at and Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions. For Hong Kong: This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) SFO. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH ) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Kong Kong. This report is intended for distribution only to Professional Investors as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors. Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong. For U.S. Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement. The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account. For Singapore Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited: Varun Kumar Kadambari Balachandran Varun.kumar@motilaloswal.com kadambari.balachandran@motilaloswal.com Contact : (+65) (+65) / Office Address:21 (Suite 31),16 Collyer Quay,Singapore Motilal Oswal Securities Ltd Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai August 2016 Phone: reports@motilaloswal.com 14