It said the Indian aviation sector is likely to look much different post the current oil price shock and it believes the supply constraints will start to show up over the next few quarters.Oil prices remain elevated as brent crude surged towards $113 per barrel, while the WTI or US crude variant prices were at $98.89 a barrel.
Last week, IndiGo announced a fuel surcharge across all its domestic and international routes amid the war in West Asia.
The Iran-US-Israel war has entered its fourth week and it threatens more volatility in oil prices. Over the weekend, US President Donald Trump threatened Iran to “fully open, without threat” the Strait of Hormuz within 48 hours or have its power plants bombed. Tehran warned that all energy, IT and desalination infrastructure, belonging to the US-Israel regime in the West Asian region will be hit if its fuel sites are targeted.While investor debate in the near-term will be mainly on earnings sensitivity, Goldman Sachs said it expects the debate to shift to the airlines’ ability to control fixed costs and balance sheet strength in the long term. These will be the key differentiators during this period, it added.
The brokerage has cut IndiGo’s earnings estimates for financial year 2026, 2027 and 2028 sharply to reflect the higher fuel costs and near-term weak Middle East traffic.
On another note, the Ministry of Civil Aviation has withdrawn the temporary cap on domestic airfares, with effect from Monday, March 23. This signals a return to market-driven pricing after months of regulatory intervention.
The airfare caps were imposed in early December 2025 at the height of the IndiGo disruption, when widespread flight cancellations triggered an unprecedented surge in ticket rates across routes.
Of the 26 analysts who have coverage on the stock, 21 have a ‘buy’ rating, three have a ‘hold’ rating and two have a ‘sell’ rating.
IndiGo shares declined 5.7% to hit a fresh 52-week low of ₹3,908.3 apiece around 11.05 am on Monday. The stock has declined 19.5% in the past month and 31.7% in the last six months.
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