Interglobe Aviation Receives 'Hold' Rating After Consistent Positive Results, High Debt Remains a Concern

Interglobe Aviation, the parent company of India's largest airline IndiGo, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company has consistently shown positive results for the past 7 quarters, with a ROCE (HY) of 22.93% and an INVENTORY TURNOVER RATIO (HY) of 110.28 times. In the last 9 months, the company's profits have also increased to Rs 7,621.72 Cr.
The stock is currently in a mildly bullish range, with multiple factors such as MACD, KST, and DOW indicating a bullish trend. Additionally, with a ROCE of 47.1, the stock is considered to have an attractive valuation with a 9.2 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 77.46%, while its profits have risen by 102.9%. The PEG ratio of the company is also at a low 0.2, indicating a market-beating performance in the long term as well as the near term.

However, the company's high debt (Debt-Equity Ratio at 9.51 times) is a cause for concern, as it indicates a weak long-term fundamental strength. The operating profit has also shown poor growth, with an annual rate of -213.70% over the last 5 years. The high Debt to EBITDA ratio of 27.04 times also suggests a low ability to service debt.

Moreover, there has been a decrease in promoter confidence, as they have reduced their stake in the company by -2% over the previous quarter and currently hold 55.29% of the company. This decrease in stake may signify reduced confidence in the future of the business.

In conclusion, while Interglobe Aviation has shown positive results and has a bullish trend in the stock market, the high debt and poor long-term growth may be a cause for concern. Investors are advised to hold their positions and monitor the company's performance closely.