Indigo gets grounded!

The market seems to be confused about “how to react to Indigo’s decision to bid for buying Air India?” The stock opened 2% higher up at Rs.1260 and soon tanked to Rs.1173, down over 5%. It is now at Rs.1184 levels, down 4.3%.

After the Union Cabinet gave its approval for privatizing Air India, Indigo yesterday surprised one and all by formally evincing interest in buying a strategic stake in the national carrier, especially in its international operations and Air India Express.

The general consensus is that Indigo simply does not have the money to buy Air India and it is making a strategic mistake, pushing itself into a quagmire of debt. Air India currently has debt of over Rs.50,000 crore on its book.