INSUBCONTINENT EXCLUSIVE:
Edelweiss Securities has given a buy recommendation on SpiceJet with a target price of Rs 179.
Shares of SpiceJet traded at Rs 128.5 around
The brokerage has set a one-year horizon for the stock to hit the target price
planning to onboard over 60 aircraft in FY20, with fleet size jumping nearly 2 times to 136 by FY20, assuming MAX deliveries resume from
Given that Jet employees have been on-boarded along with its aircraft, management does not foresee supply constraints
Moreover, additional five Jet aircraft have been offered to SpiceJet, for which discussions are underway
Deliveries of 737 MAX will resume in earnest from Q2FY20, accounting for 23 aircraft additions in FY20
SpiceJet continues to work with Boeing on compensation for 737 MAX grounding; the extent and mode of cash reimbursements will be taken up
Spike in capacity growth, lower fuel prices and higher yields will lead to the company clocking PAT of Rs 770 crore in FY20E versus a loss
in FY19, the brokerage added
successfully propped occupancy (industry best PLF of more than 90 per cent plus for 30 consecutive months)
flown (as of FY18), said the brokerage
This, coupled with obsessive focus on ancillary revenue generation, has paid rich dividends
Next big focus on industry leading cost structure Shirking legacy issues and to ensure structural cost advantages, management is
restructuring its long-term contracts
Towards this, it is working with lessors and other service providers to rationalise its cost base
Moreover, SpiceJet has sealed a 205-aircraft order to lower ownership costs and avail structural advantages.