InvestorQ : What do you make of Indigo Airlines plan to raise Rs.4000 crore via QIP placements?
Mitali Bhutta made post

What do you make of Indigo Airlines plan to raise Rs.4000 crore via QIP placements?

Answer
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Dawn Cherian answered.
1 month ago


Interglobe Aviation board approved a QIP issue of Rs.4000 crore via private placement to shore up its resources in tough markets. This will be an equity issue and hence will lead to dilution of equity of the company.

The QIP is likely to result in stake dilution of at least 10% for existing shareholders and that could pressure on the stock price. The stock currently has a market cap of Rs.36,000 crore and has already taken a big hit in the midst of the pandemic.

Indian aviation companies are estimated by CRISIL to be staring at revenue losses of Rs.130,000 crore between now and FY22. Flight restrictions has led to a surge in costs and also fixed costs not being defrayed due to low PLF.

As of June, Indigo has free cash of Rs.7000 crore of restricted cash, while its outstanding debt has gone up 28% YOY to Rs.23,551 crore. It is still not clear if the long term paradigm of the industry is changing but for now, the airline surely needs funds.