Aviation share price target

Valuation and Key Operating Matrix .................................................................. 4 India offers a robust demand environment ....................................................... 5 Increasing affordability and narrowing fare gap leading the migration from Rail to Air Travel: ........................................................................................................... 6 Air Penetration rates to piggyback economic growth ......................................... 8 India's air passenger traffic at an inflection point ............................................ 8 UDAN scheme to bring small cities under air travel ......................................... 10 Aviation Industry faces near term turbulence ................................................. 11...

Valuation and Key Operating Matrix .................................................................. 4 India offers a robust demand environment ....................................................... 5 Increasing affordability and narrowing fare gap leading the migration from Rail to Air Travel: ........................................................................................................... 6 Air Penetration rates to piggyback economic growth ......................................... 8 India's air passenger traffic at an inflection point ............................................ 8 UDAN scheme to bring small cities under air travel ......................................... 10 Aviation Industry faces near term turbulence ................................................. 11...

Given competitive intensity in the industry and the back ended nature of our EPS, we are compelled to downgrade our recommendation to a NEUTRAL with a revised TP of Rs 118 Driven by higher vols (RPKMs, +20% YoY) and higher yields (+4% YoY), SpiceJet printed an impressive 4Q revenue of Rs 20.3bn (+24% YoY). To our surprise, no yield pressure showed up (Rs 3.67, +4% YoY vs. Indigo at Rs 3.31, -5.5% YoY).

In 1QFY17, MHCV volume growth moderated to ~10% YoY following a ~30% YoY growth in FY16. LCV volumes recovered steadily at ~15% YoY. PV sales saw moderation (3% YoY) as car sales were lower in the quarter. UVs witnessed a strong uptick backed by new launches. 2W sales growth recorded a strong pick-up (14% YoY) on account of the wedding season, improvement in motorcycle demand (on expectation of better monsoon), and continued demand for scooters.

The Cabinet has cleared the much-awaited National Civil Aviation Policy (NCAP). The government intends to revive the aviation sector with the introduction of the regional connectivity scheme (RCS), which will not only benefit customers, but also airlines in the long term. We maintain our NEUTRAL rating on SpiceJet with a TP of Rs 79.

Laying out clear roadmap for inclusive growth The Ministry of Civil Aviation (MoCA) has come out with an integrated civil aviation policy with the central idea of making regional air...

Load factors stood at 84.0%/83.0% in Mar-16/in FY16 (compared to 79.1% in FY15). India's domestic passenger growth stood at 25% YoY with 7.8m passengers carried in Mar-16; and at 22% with 85.2m passengers in FY16....