Thursday, October 28, 2010
Spicejet is one of the big success stories in aviation industry of India in recent past.This best low cost airline in South Asia was originally promoted by Ajay Singh and the Kansagra family . Currently Spicejet claims a 12 % market share in Indian aviation industry. Recent entry of Kalanidhi Maran as the main promoter is expected to take the company to the next level. Financial muscle and other influence of the new promoters are expected to help the company which operates in a highly regulated industry. Aviation Industry is showing some early signs of revival worldwide . When we take it in Indian perspective,there are two positive factors .First one is the comparatively better situation of growth in Indian industry as a whole, which will ensure higher business travels . On the other side , since the world economy is still under stress, the price of ATF is not going beyond affordable level. Company recently started its international operations with the launch of Chennai-Colombo and Delhi-Kathmandu routes and the new management is expected to pay much attention in this line . Mr Neil Mill has recently appointed as the new CEO of Spiceject. He is coming to the company with a 12 year experience with ' easyJet' one of the Europe’s most successful low cost carriers.He also worked with 'Fly Dubai' , the state-run low cost carrier of Dubai. Spiceject has taken various efforts in recent past to cut cost and improve load factor .Even if its equity will be increased after the conversion of warrants ,Spicejet is expected to generate higher profit and scale the business to new levels which will justify the increase in equity. In last September quarter, company posted a loss of Rs.101 Cr ,but this time it is expected to post profit at net level.
One may hold at current level and take any correction as an opportunity to BUY for long term. Keep an eye on the movement of the price of ATF which is one of the crucial factor affecting the profitability of airline industry. CMP is Rs.86/-