IndiGo to raise up to Rs 4,000 crore via QIP; stock recovers from March low

InterGlobe Aviation, which runs one of India’s most popular airlines IndiGo, announced that the company’s board of directors has approved fundraising of up to Rs 4,000 crore through the issuance of equity shares by way of a qualified institutional placement (QIP).

QIP is a capital-raising tool, through which, listed companies can sell shares, fully and partly convertible debentures or any securities, other than warrants that are convertible into equity shares, to qualified institutional buyers.

The raising of funds will take place post receiving the necessary approvals from the shareholders and the regulatory authorities. The COVID-19 pandemic heavily affected the aviation industry as the business operations came to a complete standstill except for some cargo as well as exempted flights. This further brought about various cash and liquidity issues. As companies stared at the rising expenses with a decrease in revenue, their best option is apt cash management.

Previously, InterGlobe Aviation had announced separate plans to raise at least US$ 268 million through the sale and leaseback of planes and other assets.

Suffering from the impact of the pandemic, IndiGo reported the biggest-ever loss in the previous month. For Q1FY21, on a consolidated basis, the company’s net sales declined by 91.86 per cent YoY to Rs 766.74 crore while the company incurred a net loss of Rs 2,844.29 crore for the same quarter as against a net profit of Rs 1,203.14 crore gained in Q1FY20.

In spite of resuming the flight operations, struggles still persist to off-set its fixed costs, even after the company stated that it has managed to bring down its daily cash-burn to Rs 30 crore from Rs 40 crore in the previous quarter.

At the end of Q1FY21, IndiGo had a total cash balance of Rs 18,449.8 crore, which includes Rs 7,527.6 crore of free cash and Rs 10,922.2 crore of restricted cash. Its net debt stood at Rs 23,551.6 crore as on June 30, increasing by 27.8 per cent YoY.

Post a sharp fall on March 24, 2020, when the stock price of InterGlobe Aviation hit its fresh 52-week low of Rs 765.05 per share on BSE, the stock has recovered by 12.10 per cent. On Tuesday, the stock of the company was trading at Rs 943.10, down by 1.12 per cent or Rs 10.65 per share. The 52-week high is Rs 19,911 on BSE.