INDIGO

spread compression in FY25 vs. FY24. While, in H1FY25, this played out more than expected, there was substantial recovery in H2. This underlines our belief that a structurally lower supply industry situation in the medium term is a bigger investment thesis despite any short-term possible demand blip. The same is also ratified from a relative steady FY26 outlook shared by management despite a tough Q1, which was impacted by external challenges. Spreads get a boost from steady crude price and flattish management guidance on CASK ex-fuel. The combination of business class introduction, loyalty programme, accelerated long-haul foray with wide-body aircraft and induction of XLR underline possible new market/segment opportunities; further, highlighting that the twin strategies of internationalisation and premiumisation are firmly underway, and perhaps even picking up pace. Retain BUY. Key risks include demand decline and adverse geopolitical events.