IndiGo IPO set for Oct 27, to mop up over 3,200 crore
MUMBAI: Low-cost carrier IndiGo is not interested in flying international long-haul routes, and will continue to focus on expanding and deepening its footprint in the domestic market, the company said on Monday.
“I want to be very clear that we have no vision of flying longhaul...We want to be focused on India because this is really where the market is,” IndiGo’s president Aditya Ghosh said while formally announcing its IPO here.
InterGlobe Aviation, the holding company of India’s most profitable airline, will launch its `3,268-crore IPO, priced at `700-765 per share, on October 27.
Indigo, which has been profitable for the last seven years, attributes various measures such as buying only one type of aircraft (Airbus A320), six-year short-term sale and lease back of planes, long-term maintenance contracts and flying short-haul among other things for its success. Price band of IPO
Amount that the IPO is expected to garner The airline will continue the same strategy going ahead, Ghosh said.
IndiGo had made an interim dividend payout of `1,207 crore for 2015-16 in June and since 201011 it has paid close to `3,700 crore in dividends. Ghosh justified the dividend policy even as the airline reported a negative net worth of around `139 crore as of June 30.
“For us, the negative net worth is a non-event,” Ghosh said. “Paying a dividend is a good thing as long as you don’t compromise interests of the company. We have had very healthy cash flows and as cash starts building up, we will be back in the positive net worth zone.” He said that when the market conditions were not good in 2011-12, the company didn’t pay any dividends, despite generating `900 crore in cash.
Investment bankers to the issue justified the steep valuations. The airline should be compared to global peers such as Ryanair and EasyJet rather than Indian counterparts, said Aisha De Sequeira, head of investment banking – India at Morgan Stanley. Number of shares on offer of including those to be sold by InterGlobe Enterprises and promoter Rahul Bhatia IndiGo’s profit in 2014-15, a four-fold rise over 2013-14
IndiGo’s domestic market share