Shares of InterGlobe Aviation came under selling pressure in early trade on Friday after the company reported a weaker-than-expected financial performance for the June quarter and rising global crude oil prices heightened concerns over future margins. The stock was trading around 2.5 percent lower in morning trade on the NSE.

Investor sentiment was also impacted by a sharp increase in Brent crude prices, which have surged more than 13 percent over the past week following renewed attacks on oil tankers in the Red Sea. The escalation of geopolitical tensions in the Middle East has pushed crude prices close to the 100 dollars per barrel mark, raising concerns over higher aviation turbine fuel costs, one of the largest operating expenses for airlines.

For the June quarter, InterGlobe Aviation reported a significant decline in profitability as higher fuel expenses offset the benefits of improved ticket pricing. EBITDAR declined 34 percent year on year to Rs 37.5 billion, while EBITDA excluding foreign exchange impacts fell 39 percent year on year to Rs 32.9 billion.

The airline recorded a 21 percent year-on-year increase in passenger yield to Rs 6, supported by higher airfares. However, fuel costs increased sharply to 44.1 percent of revenue, exceeding market expectations and resulting in an adjusted net loss of Rs 3.8 billion compared with an adjusted profit of Rs 21.6 billion in the corresponding quarter of the previous year.

Following the results, Motilal Oswal Financial Services maintained its Buy rating on the stock with a target price of Rs 6,580. However, the brokerage reduced its FY27 EBITDAR estimate by 12 percent, citing the impact of higher crude oil prices and renewed geopolitical tensions in the Middle East.

Despite near-term pressure on operating margins, the brokerage remains optimistic about the airline's long-term growth prospects. It expects passenger revenue per available seat kilometre to grow around 25 percent year on year in the second quarter, supported by healthy travel demand and sustained pricing. The management also expects most of the temporarily reduced flight capacity to be restored by the third quarter of FY27, while continued expansion of the international network is expected to support long-term growth.