Shares of InterGlobe Aviation, the holding company which runs IndiGo, tumbled over 4% in opening trade on Thursday amid a report of stake sale by one of its co-founders Rakesh Gangwal and his family. Rakesh Gangwal, who stepped down from the board of IndiGo seven months ago, and his family are planning to sell a 2.8% stake in InterGlobe Aviation through a block deal for $250 million or ₹2,000 crore today. Gangwal exited InterGlobe Aviation's board in mid-February this year and said he would sell his entire holding in the country’s largest domestic carrier over a period of five years.
Weighed down by the stake sale report, IndiGo share price opened 2.92% lower at ₹1,926.10, against the previous closing price of ₹1,983.95 on the BSE. Extending opening losses, the large cap stock declined as much as 4.08% to ₹1,903 in the first half an hour of trade so far. The counter witnessed strong volume trade as 19.3 lakh shares worth ₹369.54 crore changed hands on the BSE as compared to the two-week average volume of 0.23 lakh scrips. The market capitalisation of the aviation stock dropped to ₹74,471.74 crore.
The stock has witnessed disappointing performance in the last one year, delivering a negative return of 1.3% to its shareholders during this period. On the year-to-date (YTD) basis, the stock fell 4.5%, while it dropped 7% in the past one month and 5.6% in one week. It trades higher than 50-day, 100-day, and 200-day moving averages, but lower than 5-day and 20-day averages.
The Gangwal family and their trust will offload 10.8 million shares at a price of ₹1,850 apiece, a 6.75 % discount to Wednesday’s closing price on the BSE. Citigroup, Goldman Sachs, Morgan Stanley and JP Morgan have been appointed to manage the stake sale process.
Gangwal and his family own 36.61% stake in InterGlobe Aviation, while Rahul Bhatia, another co-founder of IndiGo and its managing director, and his family hold 37.8% stake. The two partners had been at loggerheads after Gangwal approached various authorities to amend the company’s articles of association, alleging corporate governance violations. He had requested removal of the article that prevented co-founders from buying publicly listed shares in InterGlobe Aviation, and potentially triggered an open offer for the rest of the company.
The stake sale has been initiated after the company’s shareholders in December last year approved a change in the firm's Articles of Association, enabling the promoters to sell his holding without taking approval from the other.
For the April-June quarter of 2022 (Q1 FY23), InterGlobe Aviation reported a net loss to ₹1,064 crore as compared to ₹3,174.2 crore net loss in the same quarter last year. The revenue from operations hit a record high of ₹12,855.3 crore, up 328% from ₹3,007 crore in the year-ago period. EBITDAR (earnings before interest, taxes, depreciation, amortisation and restructuring) for the quarter was ₹716.9 crore, with a margin of 5.6%, as compared to a negative EBITDAR of ₹1,360 crore during the quarter ending June 2021. The quarterly report shows IndiGo has a fleet of 281 aircraft, including 35 A320 CEOs, 146 A320 NEOs, 65 A321 NEOs and 35 ATRs; a net increase of 6 aircraft during the quarter.
