CHRIST (DEEMED TO BE) UNIVERSITY, BANGALORE

DEPARTMENT OF PROFESSIONAL
STUDIES

B. Com (Finance and Accountancy)

COC541B INVESTMENT ANALYSIS AND PORTFOLIO

MANAGEMENT

Fundamental and Technical Analysis

CIA 3

Submitted by
Vanshika Goyal
(2212343)
 1. Introduction

InterGlobe Aviation Limited, operating under the brand name Indigo, is India's largest
airline by passenger count and market share; it commands a share of more than 55% in the
home market. Its LCC business model, actually, concentrated on efficiency in operations,
on-time performance, and low fare, which indeed has made up a lot of factors for its
sustained success.

1.2 Justification for Choosing Adani Power Limited

1.2.1 Market Leadership: Indigo has the highest market share in India. This is a natural
choice for an analysis which would seek to glean knowledge of the Indian Aviation
Industry. Its commanding position provides useful information regarding the performance
of the Indian Aviation Industry.
1.2.2 Growth Potential: Given the large increases in India's middle-class and major
decreases in the price of air travel, Indigo is well-situated to capture increasing demand for
both domestic and international passenger transportation.
1.2.3 Cost Efficiency: The Indigo business model is also low-cost, and that continues to
make it sustainable at profitable levels even in challenging times. For that reason, the
company's fundamental analysis is something that speaks for itself.
1.2.4 Macroeconomic Relevance: The aviation industry is highly responsive to the
economy at large-the price of fuel, exchange rates, and growth in general. It offers an
excellent scope for analysis.

2. Fundamental analysis
Fundamental analysis focuses on evaluating the intrinsic value of a company by analysing
its economic, industry, and company-specific factors. (EIC)

2.1 Economic Analysis

 Economic Growth: India is one of the fastest-growing economies in the world, and this
helps with the surging discretionary incomes and increased demand for flying. The
company benefits from this trend because, with a good populace growth rate and as more
individuals shift from the railways to air travel, the middle-class masses are moving from
trains to flights.
  Inflation and Fuel Prices: Fuel is the most significant input cost for an airline. This
itself forms a major chunk of its costs. Sharp rises in crude oil prices would impact costs
directly in the running of an airline, since fuel accounts to about 30-40% of an airline's
expenditure. Here, management of inflation in India and at the world level pertaining to
oil prices are extremely crucial.
 Interest Rates and Currency Exchange: Indigo finances a good portion of its fleet
through debt. Therefore, the rise in interest rates will boost the cost of borrowings. Also,
the decline of the Indian rupee against the dollar increases fuel cost as fuel is bought in
dollars.

2.2 Industry Analysis

 Demand for Air Travel: Rising aspirations of the middle class, courtesy government
policies to promote regional connectivity through the UDAN Scheme, has been witnessing
healthy growth in the Indian aviation sector. It is expected to grow at a CAGR of around
10-12 percent over the next decade.
 Regulatory Environment: The Government has been relatively benign to the aviation
industry, though there are issues related to regulatory fees, airport charges, and a
substantial aviation fuel tax. Indigo has to find ways around these to remain profitable.
 Indian airlines : Air India, SpiceJet, Vistara and GoAir. Indigo is, however, ahead owing to
its low-cost model and vast network. The competition can change overnight, for example
post-air India being privatised.
 COVID-19 Impact: It has had a serious impact on air travel, but Indigo has fared better,
having controlled its liquid flows, and cut costs to the bone. As things get back to normalcy
in the world, Indigo will be one of the beneficiaries of this rise in travel.

2.3 Company Analysis

Financial Performance:
 Revenue Growth: Indigo has been growing strong on the financial front by reasons of
increasing demand for flying, enhanced route network, and its management of costs
effectively.

Year Revenue (INR Crores) Growth Rate (%)

FY2019 5,282

FY2020 7,100 +34.4%

 FY2021 5,376 -24.3%
FY2022 7,818 +45.4%
FY2023 12,432 +59.0%
However, with the recovery in demand post-pandemic, tremendous growth has been
witnessed for Indigo.

 Profit Margins: Indigo has been able to maintain its bottom line buoyed by volatile fuel
prices and competitive pressures really well. Profit margins were hit during the pandemic
years.

Net
Net Profit
EBITDA (INR EBITDA Profit
Year (INR
Crores) Margin (%) Margin
Crores)
(%)
FY2019 5,282 156 18.5% 0.5%
FY2020 7,100 -233 19.9% -0.6%
FY2021 5,376 -5,806 36.7% -39.7%
FY2022 7,818 -613 30.2% -2.4%
FY2023 12,432 2,616 29.3% 6.2%
Though profitability for the firm remains significantly affected by the pandemic, indicators
of recovery are well in FY2023-that is, passenger demand and operational efficiency for the
period.

 Debt Levels: Indigo has maintained a healthy cash flow. This is one significant aspect of
keeping relatively lower debt levels compared with its major peers in the airline industry.
Additional debt was undertaken to expand its fleet and meet operational requirements.

Year Total Debt (INR Crs) Debt-to-Equity Ratio

FY2019 2,896 0.40
FY2020 2,361 0.33
FY2021 3,019 0.52
FY2022 3,856 0.61
FY2023 4,427 0.72
 Even though its debt levels have been rising to fund the expansion of its fleets and to ward
off the pandemic, Indigo could hold on to a healthy balance sheet with a manageable debt-
to-equity ratio.

 Operating Costs and Efficiency: Indigo's operating costs are fuel expenses, maintenance,
and leasing of aircraft. The company enjoys a cost advantage because it flies a single-type
fleet of Airbus A320 family aircraft that allows the company to minimize its expenditures
on maintenance and training.

1. Fuel Prices: An airline, just like any of the others, is also sensitive to prices in crude
oil. The company uses hedges to minimize this volatility.

2. Fleet Efficiency: Indigo has one of the newest fleets in the market. This again helps
save on fuel costs besides maintenance costs. Standardization of its fleet has thus enabled
the company to maintain a low-cost structure.

3. Cost Management: Indigo has so far managed to successfully bring down its non-fuel
operating costs, which in turn makes its fares low enough for it to be able to be as
competitive as possible while staying at high profitability.

2.4 Interpretation
 Economy: Much of Indigo's performance will depend on the general contours of the Indian
economy - growth in disposable incomes, tourism, and business travel. A fast-growing
Indian middle class and rising penetration of air travel are strong tailwinds.
 Industry: The airline industry is very competitive as well as capital-intensive. Indigo's
low-cost structure and leadership position in the market with an efficient operation provide
it with a strong platform to take advantage of the future growth prospects in air travel. Still,
the industry experiences oscillations regarding fuel cost, regulatory burdens, and the costs
involved which are fixed.
 Company: Indigo can be priced as a big leader in the aviation market in India with health
growth and sensible cost management in revenues. It has survived the worst of the
pandemic years and should benefit from recovery in air travel. Low-cost model and fleet
efficiency provide big differentiators; however, increasing fuel prices and competitive
pressure acts as a risk factor.
 3. Technical Analysis
Technical analysis is the study of price movements, trends, and patterns over the trend to
predict future price movements. For the upcoming section, we are going to introduce the
reader to several technical tools available: bar charts, line charts, point and figure charts,
and moving averages, with the intention of giving insight into IndiGo's five-year
performance. Here are the detailed analyses for each technical indicator-

3.1 Bar Chart Analysis

This is just a bar chart that indicates the open, high, low, and close prices of the stock for a
particular period. It enables traders to have an indication of how volatile prices have been
and which trends to expect. The following chart illustrates the year-by-year movement of
the stock price - High, low, and close price for the past 5 financial years.

Observation:
 Volatility: The stock had been through consolidation and a steep fall during the 2020
pandemic but remained well recovered since mid-2020.
 Strong Uptrend (2020-2024): The stock has been moving upwards very strongly with an
acceleration in 2023 based on post-pandemic recovery and market growth.
 Last Highs: Trading at ₹4,693, the stock is a peak, which is on all-time highs, depicting a
strong bullish sentiment.
 Volume: Rising volumes over the past year or so indicate growing interest from investors,
which bodes well with the uptrend momentum.

3.
Bar Chart
2
5,000.00
4,500.00
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0.00
19 19 19 19 20 20 20 20 20 21 21 21 21 22 22 22 22 22 23 23 23 23 23 24 24 24 24
/ 20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
7 3 8 4 9 6 2 7 3 8 6 1 7 2 0 5 1 6 2 9 5 0 6 1 8 4 9
4/ 6/2 9/ 1/2 2/ 4/2 7/1 9/2 2/1 2/2 5/1 8/ 0/1 1/ 3/2 6/ 8/2 11/ 1/2 4/ 6/2 9/1 1/2 2/1 4/2 7/1 9/2
1 1 1 1
 Line Chart Analysis
A line chart plots the closing price of a stock over time, providing a clear view of the
stock's overall price direction. It is useful for identifying long-term trends.

Observation:
1. Long-Term Trend: IndiGo showed a steadily upward trend in the last few years. The line
chart, especially from early 2023, shows it has been on the upswing. The stock has risen
sharply, reflecting investor optimism and positive business fundamentals post-pandemic.

2. Sharp Gains from 2023: Growth in the stock has been accelerating since early months
2023, breaking above previous highs, probably driven by strong recovery in air travel and
improvements in operations.

3. Corrections: This is accompanied by minor corrections during broader market downturns,

but the overall trend remains bullish, indicating continued investor confidence.

Line Chart
6,000.00

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1,000.00

0.00
9 9 9 9 0 0 0 0 0 1 1 1 1 2 2 2 2 2 3 3 3 3 3 4 4 4 4
01 01 01 01 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02
7/2 3/2 8/2 4/2 9/2 6/2 2/2 7/2 3/2 8/2 6/2 1/2 7/2 2/2 0/2 5/2 1/2 6/2 2/2 9/2 5/2 0/2 6/2 1/2 8/2 4/2 9/2
4/ 6/2 9/ 1/2 2/ 4/2 7/1 9/2 2/1 2/2 5/1 8/ 0/1 1/ 3/2 6/ 8/2 11/ 1/2 4/ 6/2 9/1 1/2 2/1 4/2 7/1 9/2
1 1 1 1
 3.3 Point and Figure Chart Analysis
A point and figure chart uses the patterns of price movements rather than time. It uses
'X's for up moves and 'Os for down moves in plotting; the distance between the "X" and "O"
markers shows prices volatility. The wider the distance, the more intense the swing in prices.
If they are closer together, the price is stable.

Observation:
 Bullish Patterns: Multiple bullish formations are seen, meaning a powerful upward price
movement. Investors are appearing quite confident in pushing the price higher over time.
 Breakdowns & Corrections: Occasional shows by the O column is regarded as a
correction or pullback, but the corrections are much weaker than the strong updrafts. It
indicates that there could be some minor selling pressures taken over so the purchases so
that the bullish trend gets strengthened.
 Increased Volatility: Distance of X and O columns has increased more with time, which
shows that the price is more volatile with larger swings. This often means that the market
is more active and enthusiastic.
 Source- https://in.tradingview.com/chart/1Ju1H78B/?symbol=NSE%3AINDIGO

Summary of Point and Figure Chart

Major Upward Major Downward
Year Overall Trend
Movements Movements

FY2019 1 3 Bearish

FY2020 4 2 Bullish

FY2021 5 1 Bullish

FY2022 6 2 Strong Bullish

FY2023 7 2 Strong Bullish

- In 2019, the downtrend far outstripped the uptrend, marking the bearish stage.
- From 2020 onwards is a clear upward trend with gradually picking up the pace of bull run
momentum.
- The Years 2022 and 2023, are particularly powerful bullish trends; the chart is dominated
by very significant upward movements.

3.4 Moving Average Analysis (MVA)

Moving averages are key indicators used to smooth out short-term fluctuations and
confirm the direction of a trend. We analyse the 50-day and 200-day moving averages to
understand the stock’s price movement over the short and long term.

The 50-day moving average (50-MA) calculates the average closing price of a stock over
the past 50 days, while the 200-day moving average (200-MA) does the same over 200
days.

Observation

1. Price Movement:
-Growth Phases: This suggests growth and positive momentum. It primarily signifies that
the market anticipates good returns from the company soon.
-Declines: There were periods of decline, most overtly in 2020, which might be said to fit
into more significant economic distresses, including the Covid-19 pandemic. The stock
then recovered and showed strength and revived investor sentiment after these declines.

2. Moving Averages:
The 50-day moving average is a short-term indicator of how the stock has fared in the last
recent days.
The 200-day moving average will give a broader view, which helps understand the
general trend of the stock over a more extended period.

The price is currently above both the short- and long-term moving averages; in general,
this means that the stock has been in a good upward trend. When the price stays above
these averages, it suggests that the stock is doing better against both recent and longer-term
trends.

3. General Trend:
Overall, the pattern observed on the chart is that of an ascending line, meaning over the
long term, the stock price displays an uptrend that grows in value. This would point to a
bullish sentiment where market participants believe the company offers good growth
potential.

Intraday Corrections: The stock is in an uptrend, but there are some minor corrections or
dips. Those corrections tend to offer some selling moments probably to lock profits, or the
market reaction to immediate short-term news or events. These minor dips, however, do
not alter the long-term positive outlook.
 Moving Average
6,000.00

5,000.00

4,000.00

3,000.00

2,000.00

1,000.00

0.00
9 9 9 9 0 0 0 0 0 0 1 1 1 1 1 2 2 2 2 2 3 3 3 3 3 4 4 4 4
01 01 01 01 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02 02
7/2 6/2 5/2 3/2 2/2 2/2 1/2 9/2 8/2 7/2 7/2 6/2 5/2 3/2 2/2 0/2 1/2 0/2 8/2 7/2 5/2 6/2 5/2 3/2 2/2 1/2 1/2 9/2 8/2
4/ 6/1 8/2 11/ 1/1 3/2 5/3 8/ 0/1 2/2 3/ 5/1 7/2 10/ 2/1 2/2 5/ 7/1 9/1 1/2 2/ 4/1 6/2 9/ 1/1 1/2 3/3 6/ 8/1
1 1 1 1 1

Series1 Series2

3.5 Summary of Key Technical Indicators (Past 5 Years)

Technical Trend Key Insights

Indicator

Bar Chart Volatility with a strong uptrend growing investor interest, and a
Analysis from 2020 to 2024, bullish sentiment

Line Chart Steady upward trend with sharp Reflects investor optimism
Analysis gains starting in early 2023.

Point and Bullish formations with Suggests strong market

Figure increased volatility upward confidence
Analysis price movements.

Moving Ascending trend with the price performing well against both
 Average currently above moving short- and long-term trends,
averages. bullish market sentiment.

3.6 Conclusion based on Technical Analysis

IndiGo shares have experienced a healthy rebound since 2020, with investor
confidence building steadily. Trades are increasing, and indicators show bullish trends. The
market is optimistic about IndiGo's future, expecting growth to sustain due to industry
recovery and business fundamental improvements. Minor corrections are part of a healthy
market adjustment, and the stock is building long-term momentum, indicating positive
sentiment and industry trends.

4. Comparison of Fundamental and Technical Analysis for IndiGo Stock

Aspect Fundamental Analysis Technical Analysis

Focus Evaluates the intrinsic value Analyzes price movements,
based on economic, industry, patterns, and trends to predict
and company-specific factors. future stock price behavior.
Key Metrics Used Revenue growth, profit Charts, indicators (bar charts,
margins, debt levels, line charts), moving averages,
operating efficiency, and and price trends.
macroeconomic factors (e.g.,
GDP).
Time Horizon Long-term perspective, Short- to medium-term
assessing the company's perspective, aiming to
growth potential and market capitalize on market trends
positioning. and trading patterns.
Key Findings for IndiGo IndiGo is well-positioned due IndiGo shows a strong
to economic growth in India, uptrend since 2020, with
increased air travel, and cost- rising trading volumes and
efficient operations. bullish formations in price
charts.
Indicators of Strength Market leadership, Stock trading above moving
sustainable cost structure, and averages; multiple bullish
healthy revenue growth post- patterns suggest continued
pandemic recovery. upward momentum.
Key Risks Rising fuel costs, currency Short-term corrections and
fluctuations, regulatory volatility may pose risks for
challenges, and competition traders aiming for quick
from other airlines. gains.

4.1 Investment decision

 Based on the integration of both fundamental and technical analyses, the following
conclusions support an investment decision in InterGloabe Aviation Limited

4.1.1 For Long-Term Investors

 Investment Rationale: Investment Rationale Indigo is at an excellent investment stage for

high growth, as the Indian economy is booming and a rising middle class there is triggering
rising demand for air travel. Indigo's healthy revenue growth and manageable debt position
it well for recovery in air travel and industry expansion.

 Risk Consideration: Key risks are rising fuel prices, a major part of operating costs, and
competitive pressures from Air India's privatization. Indigo's cost management and fleet
efficiency help reduce these risks.

4.1.2 For Short-Term Traders

 Investment Rationale: Indigo has bullish stock and shares trading at an all-time high
above the average for 50-day as well as 200-day averages. The company is experiencing
increased volumes with chart patterns predicting that the price will go higher. This makes
investors notice it.

 Risk Consideration: A trader should use minor corrections to open a buying opportunity.
Due to volatile markets, a trader should apply stop-loss orders so that he/she reduces risks
about short-term price fluctuations.