Won "Best Low Cost Airline In India/ Central Asia" for the 7th consecutive year at

2016 Skytrax World Airline Award.

Named as one of India's best companies to work for 8th year in a row. Received the
AON Best Employer Award in 2016
Rahul Bhatia and his father wanted to start an airline since many
years and persuaded Rakesh Gangwal for years to co-found the
airline. Rakesh initially had no interest in starting an airline, but over
dinner at Bhatia's house one evening he agreed to work with them
to launch the airline.
"Look, you guys decide how much money you want to lose. I will
work with you. I don't want any part of this business. I will give you
all my knowledge or whatever experience I have. But once you have
lost that money, shake hands and remain friends"
Rakesh Gangwal to Rahul & Kapil Bhatia

Made an audacious but ingenious move which turned heads by

ordering 100 A-320s in 2005, before launching operations in
2006.
Became no. 1 airline by market share in 2012, in just 6 years of
commencing operations.
In 2015 placed orders for 250 A-320 Neos worth $ 27 Billion,
which is the single largest order for Airbus in its history.
Made Profits at a time of high crude prices and other airlines
were in red.
 Huge growth potential, India one of the most underpenetrated markets
Despite double-digit passenger CAGR of 12% over the last two decades, the Indian aviation
sector is significantly underpenetrated-per capita seats at 0.08 v/s 2.6/1.6 in the US/Canada and
average of 0.5 in Brazil, Thailand, Indonesia and China. However, India is set to become the 3rd
largest aviation market by 2030, driven by (a) value migration from rail to air, (b) increasing per
capita GDP and disposable income, (c) growing tourism and (d) favourable aviation policy.

Market leadership likely to strengthen further:

With 34% market share, IndiGo is well positioned to benefit in the underpenetrated Indian
aviation market. Current macro factors offer favourable conditions for demand drivers.

Low cost a sustainable competitive advantage:

IndiGo is not only the lowest-cost operator domestically, but is also comparable with global low-
cost airlines. IndiGos (a) unique fleet strategy, (b) focus on lowering operating costs, (c) visionary
management and (d) scale gives it a sustainable competitive advantage over peers.

Highly efficient management:

IndiGos management has proven its expertise in the unique fleet strategy and its focus on
containing non-fuel costs (flat for the last 5 years). Also, managements commentary that it is a
low-cost carrier and not low-fare carrier implies preference to profitability over market share.
 Investor-friendly dividend policy:

IndiGos focus to lower fixed costs (through higher operating leases) and negative working capital
helps it to significantly increase distributable free cash flow. For the last five years, its dividend
stood at 30% of operating cash flow and 76% of profit. Management has indicated that it
expects to continue its dividend policy of high payouts.

which coupled with operating cost leadership, drives industry-leading

profitability:

Indigo's fuel cost leadership over competitors to widen as it gets deliveries of 15% more fuel-
efficient A320 neo aircrafts, which are expected to form 33% of Indigo's fleet by FY18.
Focus on a) high-density routes, (b) consistently high load factor and c)improving aircraft
utilization will help it remain the most profitable airline, in our view.

Key risks:

A sharp slowdown in the Indian economy, sudden jump in oil prices, high cash burn strategy by
competitors and any adverse regulatory move.
Key Charts

Price Movement Since Listing

Price
52 Week High - 1342
52 Week Low - 768
1342

973
878 837
906
768

Nov-15 Jan Feb April Aug Dec-16

Interglobe Aviation's Stock listed on the Stock Exchange for the first time in November,
2015 and closed 15% above its issue price. The issue was subscribed 6 times in its IPO in
the upper range of its price band of Rs 700-750. During the last 1 year stock price
witnessed a high of Rs. 1,342 and a low of 768.

100%
Shareholding

95%
14 14 14 14

90%
Public (FII + DII)
Promoter
85%

86 86 86 86
80%

75%
SEP' 16 JUN' 16 MAR' 16 DEC' 15

The promoter share-holding in the company has remained constant, in the last four
quarters.
 Revenue & Profit (In Crores)
Profit/Loss For The Period Revenue

14,309 16,601
9,440 11,432
5,709

141 783
474 1296 1990

Stunning compounded annual Revenue growth of 30% and Profit growth of 94%.
Such consistency !! Could make Virat Kohli proud

Profitability Ratios (In %)

18.10

9.46 13.06
11.98

4.43 9.05
8.30
2.46
4.15
0.86
2012 2013 2014 2015 2016

Operating Profit Ratio Net Profit Margin

Operating Profit Margin has shown consistently phenomenal CAGR of 110%.

Net Profit Margins has synchronized with OPM , and grown at CAGR of 49%.

IndiGo is the only airline in India to be profitable for the last seven years. Given
the volatile ATF prices in the last decade, this feat magically resembles Deepa Karmakar's
Pordunova.
 Return Ratios (In %)
Return On Assets Earning Power Return on Capital Employed

28.01

22.59
21.51
17.71 17.86
14.20
16.73
16.49 9.36 13.04

5.27 7.98
3.88 6.34
3.85

2012 2013 2014 2015 2016

Return on Assets - Has had a roller-coaster ride, rising by 300% in 2013 and then decreasing
by 60%. in 2014. Overall it rose by CAGR of 44% from 2012 - 2016.
Earning Power - It is the ratio of Earnings before Interest & Taxes and Total Assets. Currently,
Indigo enjoys a robust earning power of 28% which has grown at a superb CAGR of 64%.

Return On Capital Employed - A healthy rate of 18% at the moment which has
grown at a CAGR of 36% during 2012-16.

Dividend Payout Ratio (NP) (%)

70.03 79.58 83.33

77.57

0.00

The company has been bounteous in paying Dividends steadily. With continuously rising Net
Profit, Dividend paid has also risen simultaneously.
 Debt - Equity & Debt Servicing Ratios
Interest Coverage Ratio Debt-Equity

2016 19.98
3.60
2015 14.89
16.28
2014 2.86
13.61
2013 16.08
9.02
2012 0.46
8.46

The debt-equity ratio of Interglobe has been extremely high, till 2015. Increase in equity post
its IPO of 3,200 crores in Oct 2015, has resulted in lowering of debt-equity ratio. Also, the
debt has reduced by 600 crores in 2016 as compared to year ended 2015.
The Debt-Equity is ratio is high in the case of Interglobe, because of the Sales & Leaseback
arrangement adopted by it for acquiring aircrafts. Under its intensive expansion strategy, the
company has placed orders of more than 500 aircrafts in the last decade, leading to a huge
lease amount.
An Interest Coverage Ratio in late teens signifies, ample security from the point of coverage
of interest expenditure by PBIT.

Asset Turnover Ratios

Fixed Assets Turnover Total Assets Turnover

6.44 7.11

3.99
3.24 3.46

1.99
1.57 1.53 1.44
1.40

2012 2013 2014 2015 2016

Total Assets Turnover Ratio signifies the proportion of Sales to Total Assets of the company.
Its a yardstick to measure the optimality of utilisation of total assets of the company in
generating sales. The ratio in Interglobes case has been constant around 1.5 times,
indicating a fairly efficient utilisation of assets in generating revenue.
The Fixed Asset Turnover Ratio has fallen from 6 and steadied around 3, which is also
outstanding, exhibiting great employment of fixed assets of the company.

Proprietory Ratio
1.20
Proportion of Asset Funding

1.00

0.80

0.60

0.40

0.20

0.00
2012 2013 2014 2015 2016
Debt 0.93 0.93 0.95 0.96 0.86
Equity 0.07 0.07 0.05 0.04 0.14

Proprietary Ratio reveals the portion of Total Assets financed by the Shareholders Funds. It
is evident that almost 90% of assets are funded from Debt and shareholders capital is
minimal as compared to Debt financing. i.e. if the company went into liquidation only 14% of
the assets shall be distributed to the shareholders.

Liquidity Ratios
Current Ratio Cash Ratio

1.76
1.66
1.70

1.22 1.13 1.42

1.40
1.34
0.99 0.90

2012 2013 2014 2015 2016

The liquidity ratios have been constantly above 1, indicating a healthy liquidity position.
 Du Pont Analysis
Du-Pont Basic model is a financial ratio based on the return on asset ratio that is used to
analyze a company's ability to increase its return on assets. In other words, this model
breaks down the return on asset ratio to explain how companies can increase their return
for investors.

The DuPont Basic analysis looks at three main components of the ROA ratio.

Profit Margin
Total Asset Turnover
(Absolute figures, not in %)
2012 2013 2014 2015 2016
Du- Pont Basic 0.04 0.16 0.06 0.13 0.17
Net Profit Margin ratio 0.03 0.08 0.04 0.09 0.12
Total Assets Turnover 1.57 1.99 1.53 1.44 1.40

The rise in return on assets can be attributed to, rise in Net Profit Margin, since the Total Assets
turnover ratio has remained constant around 1.5. Sales have increased at CAGR of 30%,
simultaneously the assets of the company have also increased proportionately. As it is an airline,
increase in aircrafts can only bring increase in sales. Therefore, the company must find ways to
expand its return on assets by improving Net Profit Margin.

Du-Pont Extended model is a financial ratio based on the return on equity ratio that is
used to analyze a company's ability to increase its return on equity.

The DuPont Extended analysis looks at three main components of the ROA ratio.

Profit Margin
Total Asset Turnover
Total Assets/ Equity
(Absolute figures, not in %)
2012 2013 2014 2015 2016
Du-Pont extended 0.58 2.48 1.17 3.06 1.76
Net Profit Margin ratio 0.02 0.08 0.04 0.09 0.12
Total Assets Turnover 1.57 1.99 1.53 1.44 1.40
Total Assets/ Equity 14.99 15.02 18.45 23.44 10.53

Interglobe has an exceptionally high return on equity, while the net profit Margin and Total Assets
Turnover Ratios are moderate, the funding of assets from equity is very less - which is evident from
high Total Assets to Equity Ratio. It points out to a high debt in capital structure of the company,
which is one reason for a high return on equity.
Ratios
2012 2013 2014 2015 2016
Revenue (In crores) 5709 9440 11432 14309 16601
Profit/Loss For The Period 141 783 474 1296 1990

Liquidity Ratios
Current Ratio 1.76 1.66 1.22 1.13 1.70
Quick Ratio 1.73 1.63 1.19 1.09 1.66
Cash Ratio 1.40 1.34 0.99 0.90 1.42

Leverage Ratios
Debt-Equity 8.46 9.02 13.61 16.28 3.60
Debt-Asset Ratio 0.56 0.60 0.63 0.64 0.51
Interest Coverage Ratio 0.46 16.08 2.86 14.89 19.98
Debt Service Coverage 1.62

Turnover Ratio
Fixed Assets Turnover 6.44 7.11 3.99 3.24 3.46
Average Fixed Assets 886 1329 2864 4416 4802
Total Assets Turnover 1.57 1.99 1.53 1.44 1.40
Average Total Assets 3647 4750 7478 9939 11896
Proprietary ratio 0.07 0.07 0.05 0.04 0.14

Profitability Ratios (In %)

Operating Profit Ratio 0.86 9.46 4.43 13.06 18.10
Net Profit Margin 2.46 8.30 4.15 9.05 11.98

Return Ratios (In %)

Return On Assets 3.85 4.12 1.59 3.26 4.18
Earning Power 3.88 22.59 9.36 21.51 28.01
Return on Capital Employed 5.27 17.71 7.98 14.20 17.86
Return on Equity 57.78 247.75 117.03 305.58 176.04
Dividend Payout Ratio (NP) (%) 0.00 70.03 79.58 83.33 77.57
Profit & Loss Statement In crores

2016 2015 2014 2013 2012

INCOME
Revenue From Operations [Gross] 16,042 13,925 11,117 9,203 5,565
Revenue From Operations [Net] 16,042 13,925 11,117 9,203 5,565
Other Operating Revenues 97 0 0 0 0
Total Operating Revenues 16,140 13,925 11,117 9,203 5,565
Other Income 461 384 316 237 144
Total Revenue 16,601 14,309 11,432 9,440 5,709
EXPENSES
Purchase Of Stock-In Trade 115 82 58 56 34
Aircraft Fuel Expenses 4,779 5748 5513 4313 2874
Aircraft Lease Rentals 2,612 1952 1670 1356 801
Changes In Inventories Of FG,WIP And Stock-In
Trade -1 -3 1 -2 -1
Employee Benefit Expenses 1,790 1189 921 690 512
Finance Costs 135 116 123 58 51
Depreciation And Amortisation Expenses 503 302 226 86 67
Other Expenses 3,839 3088 2447 1896 1296
Total Expenses 13,772 12473 10959 8453 5634

Profit/Loss Before Extra-Ordinary

Items And Tax 2,829 1836 474 987 75
Profit/Loss Before Tax 2,829 1836 474 987 75
Current Tax 730 387 93 192 8
Less: MAT Credit Entitlement 0 203 93 109 8
Deferred Tax 109 356 -1 120 -66
Total Tax Expenses 839 540 -1 204 -66

Profit/Loss For The Period 1990 1296 474 783 0

EARNINGS PER SHARE

Basic EPS (Rs.) 58.17 42.2 15.45 25.52 4.58
Diluted EPS (Rs.) 56.49 37.69 13.8 22.79 4.09
Equity Share Dividend 1543 1080 378 549 0
Tax On Dividend 314 211 64 89 0
Equity Dividend Rate (%) 150 3517 1230 1787 0
Balance Sheet In crores

2016 2015 2014 2013 2012

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 360.36 30.7 30.7 30.7 30.7
Preference Share Capital 0 3.67 3.67 3.67 3.67
Total Share Capital 360.36 34.37 34.37 34.37 34.37
Reserves and Surplus 1473.92 391.85 387.37 354.68 208.96

Total Shareholders' Funds 1834.28 426.22 421.74 389.05 243.33

NON-CURRENT LIABILITIES
Long Term Borrowings 2949.86 3588.4 3080.74 1617.33 905.55
Deferred Tax Liabilities [Net] 517.97 409.14 52.86 53.72 0
Other Long Term Liabilities 3650.06 3348.7 2661.22 1891.24 1154.22
Long Term Provisions 81.06 52.29 36.83 23.16 15.83
Total Non-Current Liabilities 7198.96 7398.52 5831.65 3585.45 2075.6
CURRENT LIABILITIES
Short Term Borrowings 0 0 0 81.43 30.56
Trade Payables 741.23 475.48 382.76 264.79 158.48
Other Current Liabilities 2556.33 2320.7 2002.78 1500.99 1120.44
Short Term Provisions 688.32 152.85 464.51 30.79 18.65
Total Current Liabilities 3985.87 2949.03 2850.05 1878 1328.13
Total Capital And Liabilities 13019.11 10773.77 9103.44 5852.49 3647.06
ASSETS

NON-CURRENT ASSETS
Tangible Assets 4675.52 4866.4 3940.72 1754.79 881.31
Intangible Assets 19.97 9.64 15.25 9.67 4.7
Capital Work-In-Progress 23.73 0.45 0 6.85 0
Intangible Assets Under
Development 8.23 0 0 0 0
Fixed Assets 4727.45 4876.49 3955.97 1771.31 886.01
Non-Current Investments 0.03 0.05 0.05 0.04 0
Deferred Tax Assets [Net] 0 0 0 0 66.51
Long Term Loans And Advances 1193.06 1123.66 801.21 524.7 297.31
Other Non-Current Assets 1497.78 1605.56 1431.52 485.77 88.53
Total Non-Current Assets 7418.33 7605.76 6188.74 2781.81 1338.36
CURRENT ASSETS
Current Investments 974.12 516.75 1271.48 1138.34 523.42
Inventories 126.72 130.55 67.29 52.28 37.39
Trade Receivables 157.11 104.55 89.12 68.52 38.92
Cash And Cash Equivalents 3718.67 1999.38 1101.53 1340.59 1308.83
Short Term Loans And Advances 224.88 155.56 223.13 358.66 317.95
Other Current Assets 399.29 261.22 162.14 112.3 82.2
Total Current Assets 5600.79 3168.01 2914.69 3070.68 2308.7
Total Assets 13019.11 10773.77 9103.44 5852.49 3647.06
 Thoughts On Investing

"I always knew I was going to be rich. I don't think I ever doubted it for a moment."

"Someone is sitting in Shade today, because someone planted a tree long ago."

"Success in investing doesn't correlate with I.Q. once you are above the level of 125. Once you have ordinary
intelligence, what you need is the temperament to control the urges that

get other people into trouble into investing."

"I just sit in my Office and read all day"

"Risk comes from not knowing what you are doing."

- Warren Buffet

Force yourself to write 5 lines before you take a decision on why you are buying or selling something. The
main reason people loose money is because they don't follow a process before taking decisions."

- S. Naren CIO ICICI Prudential Mutual Fund

"I invest in businesses that have enduring competitive advantages and scalable business models run by
owners who are both competent and honest"

- Prof. Sanjay Bakshi, MDI Gurgaon

"Stop blaming others, learn from your own mistakes. - Samir Arora, Helios Capital

"If investing is entertaining, if you are having fun, you are probably not making any money. Good investing
is BORING." - George Soros

The best thing a human being can do is to help another being know more."

- Charlie Munger

"Parent's Blessings and

God's Grace."

India's Star Trader & Investor, is often asked about the

secret for creating wealth and as usual he speaks about quality of management, scalability, ROCE,
dividends, cash flows, etc. But a frame put outside his cabin conspicuously reads as above.