Interglobe Aviation Limited - IPO Note
Rishi Chourasia
Please find attached IPO Note of “Interglobe Aviation Ltd”.
Issue Details
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Interglobe Aviation Limited |
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Issue Period |
Issue Opens On*: Tuesday, October 27, 2015 Issue Closes On : Thursday, October 29, 2015 *The Anchor Investor Bidding Date shall be one Working Day prior to the Bid/ Issue Opening date. |
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Price Band |
Rs. 700 – 765 |
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Employee Discount |
10% on the Issue Price |
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Bid Lot |
15 Equity Shares and multiple thereof |
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Issue Size |
Rs.3,100.04~ – 3,269.77^ Crores |
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Lead Manager |
Citigroup Global Markets, J.P. Morgan India, Morgan Stanley, Barclays Bank PLC, Kotak Mahindra Capital Co., UBS Securities |
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Registrar |
Karvy Computershares Pvt. Ltd. |
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Issue Structure |
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Issue |
Fresh Issue for Rs.1272.20 Crores + Offer for Sale of 2,61,12,000 Shares |
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Employee Reservation |
32,00,000 Shares |
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QIB* |
50% of Net Issue ( 1.98~ - 2.05^ Crores Shares) |
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NIB |
15% of Net Issue ( 0.59~ - 0.62^ Crores Shares) |
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Retail |
35% of Net Issue ( 1.38~ - 1.44^ Crores Shares) |
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* Company may allocate up to 60% Shares of the QIB Portion to Anchor Investors. |
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~ Upper Price Band, ^ Lower Price Band |
Issue Highlights
· Incorporated on January 13, 2004, Interglobe Aviation Limited (“IndiGo”) operates IndiGo - India’s largest passenger airline in India’s domestic air travel market. IndiGo is largest passenger airline with a 37.4% market share of domestic passenger volume for the five months ended August 31, 2015. IndiGo’s market share of domestic passenger volume increased from 17.6% in fiscal 2011 to 33.9% in fiscal 2015.
· The company operate on a low-cost carrier (“LCC”) business model and focus primarily on the domestic Indian air travel market. The company operated scheduled services to 33 airports in India, with a maximum of 603 domestic flights per day.
· One of the lowest cost carriers globally with a track record of consistent profitability, strong cash flow generation and balance sheet and liquidity position;
· IndiGo has the second youngest average fleet age among Indian carriers and one of the youngest fleets of any Low Cost Carrier (“LCC”) globally.
· One of the first airlines globally to order the A320neo aircraft which are expected to consume up to 15% less fuel than current generation A320 aircraft without sharklets.
· The company has achieved positive net profit in fiscal 2009 and has remained profitable in each subsequent fiscal year through fiscal 2015.
· The shares will be listed on BSE and NSE.
Background – Company & Promoters
Interglobe Aviation Limited (“IndiGo”) was originally incorporated in Lucknow as InterGlobe Aviation Private Limited, a private limited company. Pursuant to a special resolution of the shareholders of the company on June 30, 2006, the company was converted into a public company and the name of the company was changed to “InterGlobe Aviation Limited”.
IndiGo is committed to achieving industry-leading on-time performance and operational reliability. IndiGo has operational reliability ratings of 99.95% in fiscal 2015 and 99.94% in fiscal 2014. The average on-time performance was 83.8% for the five months ended August 31, 2015, 86.7% in fiscal 2015 and 88.2% in fiscal 2014.
The company has benefited from the support and experience of their Promoters, Shri Rahul Bhatia and Shri Rakesh Gangwal. Shri Bhatia holds leadership positions in several companies in the travel and hospitality industries, such as InterGlobe Enterprises and Acquire Services Pvt. Ltd. Shri Gangwal has over 30 years of experience in the airline industry, including over 15 years of senior management experience at several leading airlines, such as US Airways, United Airlines and Air France. Most notably, Shri Gangwal was the Chief Executive Officer of US Airways and the Chairman and Chief Executive Officer of Worldspan.
Business Overview
Interglobe Aviation Limited (“IndiGo”) is operating IndiGo - India’s largest passenger airline with a 37.4% market share of domestic passenger volume for the five months ended August 31, 2015. The company operate on a low-cost carrier (“LCC”) business model and focus primarily on the domestic Indian air travel market. IndiGo is the seventh largest low-cost carrier globally in terms of seat capacity in 2014. The company is continuously focus on maintaining the cost advantage and a high frequency of flights while striving to fulfil the simple brand message of providing “low fares, ontime flights and a hassle-free experience” to the passengers.
The company has commenced operations in August 2006 with a single aircraft, and have grown the fleet to 97 aircraft as of August 31, 2015, all of which are Airbus A320 aircraft. IndiGo currently has an order book of 430 A320neo aircraft and expect to take delivery of 14 additional aircraft, including 9 A320neos, by March 31, 2016. As of August 31, 2015, the average age of their aircraft was 3.7 years. IndiGo has the second youngest average fleet age among Indian carriers and one of the youngest fleets of any Low Cost Carrier (“LCC”) globally.
As of the week ended April 30, 2015 IndiGo operated scheduled services to 33 airports in India, with a maximum of 603 domestic flights per day. IndiGo operated an average of 570 domestic flights per day, for the month ending March 31, 2015, resulting in more passenger flights in India than any other airline, according to CAPA. IndiGo also had the highest market share in each of the top five domestic routes in India by traffic during fiscal 2015.
IndiGo primarily operate in India’s domestic air travel market, which is forecast to be the world’s fastest growing airline by origin-and-destination market between 2013 and 2033, estimated to grow at an average annual rate of 9.5%. India was the ninth largest aviation market in the world by total domestic and international seat capacity in 2014. Additionally, India has achieved strong and sustained growth in air traffic over the last ten years. Passenger volumes for domestic air traffic have increased at a CAGR of 19.4% between fiscal 2004 and fiscal 2010 and a CAGR of 9.1% between fiscal 2010 and fiscal 2015.
From fiscal 2010 to fiscal 2015, their domestic passenger volume increased at a CAGR of 25.8% from 9.5 million domestic passengers in fiscal 2011 to 23.7 million domestic passengers in fiscal 2015 and 12.6 million domestic passengers as of August 31, 2015. The market share of domestic passenger volume increased from 17.6% in fiscal 2011 to 33.9% in fiscal 2015.
IndiGo is one of the first airlines globally to order the A320neo aircraft and these aircrafts are expected to consume up to 15% less fuel than current generation A320 aircraft without sharklets, which will further reduce the fuel consumption per flight.
The company has achieved positive net profit in fiscal 2009 and has remained profitable in each subsequent fiscal year through fiscal 2015.
IndiGo has the lowest Cost per Available Seat-Kilometre (“CASK”) of all Indian carriers in fiscal 2014 and amongst one of the lowest CASK excluding fuel expenses compared with publicly-listed Low cost Carrier (“LCC”s) globally.
IndiGo has the highest profitability as measured by Revenue per Available Seat-Kilometre (“RASK”) minus CASK for any airline in India and is at a level in line with LCCs operating in Asia during the most recently completed fiscal year.
IndiGo has used the consistent profitability to reinvest in the business to build scale and efficiencies and to provide returns to their shareholders. As of June 30, 2015, Indigo has total indebtedness of Rs.3,912.38 Crores and Rs.3,412.02 Crores of net debt (net of free cash). As of December 31, 2014, all of their indebtedness is aircraft related, and they did not have any working-capital-related indebtedness.
Brief Financial Details* (Rs. In Crs)
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Particulars |
Apr-Jun’15 (3) |
For Year Ended 31st March |
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2015 |
2014 |
2013 |
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Equity Share Capital |
343.72 |
34.37 |
34.37 |
34.37 |
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Reserves |
(483.10) |
391.85 |
386.26 |
354.38 |
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Networth |
(139.39) |
426.22 |
421.74 |
389.05 |
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Revenue from Operations |
4,211.54 |
13,925.34 |
11,116.58 |
9,203.13 |
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Revenue Growth (%) |
- |
25.27% |
20.79% |
- |
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EBITDAR |
1,576.79 |
3,831.76 |
2,206.13 |
2,286.25 |
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EBITDAR Margin(%) |
37.44% |
27.52% |
19.85% |
24.84% |
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EBITDA |
975.11 |
1,879.53 |
535.81 |
930.10 |
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EBITDA Margin (%) |
23.15% |
13.50% |
4.81% |
10.11% |
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Profit Before Tax |
925.27 |
1,835.75 |
473.58 |
987.32 |
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Net Profit |
640.44 |
1,295.86 |
474.44 |
783.36 |
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Earning per Share (Rs.) |
20.64 |
42.20 |
15.45 |
25.52 |
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Return on Networth (%) |
- |
306.61% |
113.48% |
203.27% |
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Net Asset Value (Rs.) |
(4.06) |
13.76 |
13.62 |
12.55 |
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(Source: RHP)
