Spicejet Ltd. share price target

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improved sequentially despite Pax services being impacted by 2 nd Covid wave. However, SJET's adjusted losses widened YoY/QoQ to Rs8.7bn largely, on account of lower scale of operations and input cost inflation. SJET continues to focus on managing cash flows through 1) renegotiating rentals/ maintenance costs 2) deferring payments to vendors 3) capital raise via QIP & hiving off cargo arm and 4) Rs1.3bn raised via ECLGS scheme. SJET is looking to hive off its cargo arm for a consideration of Rs25.5bn on slump sale basis which shall enable greater focus on cargo business and raise...

SJET's Q4FY21 revenue plunged 35% YoY and it reported an adjusted net loss of Rs 2.4bn, translating to negative EPS of Rs 3.9

respectively and upgrade to Buy (earlier Hold) given 1) resilient scale up of operations helped by charter demand 2) sustained increase in load factors on the back of easing lockdown restrictions and rising consumer confidence....

1) sluggish scale up of operations due to localized lockdowns and 2) low consumer confidence due to rising incidence of Covid-19 cases SJET reported better than expected 1Q21 unit revenues with operating RASK...

SpiceJet (SJET) ranks second in the domestic aviation industry with ~17% share.

compensation) down 7.4% while non-Fuel CASK increased by 33.5% due to Covid-19 led disruption with operations being suspended in late March. While market leader Indigo reported 1% yield growth in the same period, SJET reported 10% decline in yields despite industry leading load factors impacted by 1) increased exposure to intensely competitive metro to metro routes and 2) dual class fleet operations. SJET continues to negotiate with Boeing regarding compensation for the grounded Boeing 737 Max, we shall keep a close eye on payment terms and actual flow of compensation....

Maintain BUY as (1) SpiceJet will benefit from the improving industry structure in the medium term (2) Fuel prices remain benign, which will allow for better cost management (3) Further, any resolution with regards to the 737 MAX planes will improve the cost structure of the low cost carrier. The stock is trading at reasonable valuations of 9.6/6.7/5.9x EV/EBITDAR on FY20/21E/22E. SpiceJets 2QFY20 results were weaker than expected (Reported loss of Rs 4.6 bn) due to the adverse impact from the grounding of the 737 MAX planes as well as seasonality. We have lowered our EBITDAR estimates by ~ 15% over FY20-22 to factor in the above. Maintain BUY with a revised TP of Rs 140 (at 7x Sep-21E EV/EBITDAR).

Given competitive intensity in the industry and the back ended nature of our EPS, we continue to maintain our NEUTRAL stance with a revised TP of Rs 101, based on a EV/EBITDAR target multiple of 8x on a Sep 20E EBITDAR. SpiceJet printed an impressive 1QFY19 revenue of Rs 22.4bn (+19.6% YoY). Unlike that of Indigo, Spicejets yield continued to move upwards and came in at Rs 4.07, +2.7% YoY (Indigos at Rs 3.62, -5.5% YoY). Additionally, the company also rationalized its costs by turning in one of its wet leases thereby reducing its lease rentals costs by 6.2% QoQ. EBITDA growth was commendable +20.4% QoQ (but -63.3% YoY) despite higher (+12.1% QoQ) fuel costs and Rs 509.1mn forex losses (on liabilities).

We upgrade to BUY with a revised TP of Rs 165, based on 14x Dec-19-EPS. SpiceJets 3QFY18 results were ahead of estimates on better than expected yield and load factor. Revenue grew 26.8% to Rs 20.8bn, as yield was higher by 8.8%. Adj. PAT was up 68.3% at Rs 2.4bn. ASKM/RPKM growth was strong at 15.5%/18.8% respectively, with passenger growth at 18.2%.

As of now, we maintain NEUTRAL with a revised TP of Rs 145, based on 14x Sept-19-EPS. SpiceJets 2QFY18 results were largely in-line with expectations. Revenue grew 30% to Rs 18.1bn, as yield was lower by 1.9%. PAT was up 79% at Rs 1.8 bn. ASKM/RPKM growth was strong at 25.6%/28.1% respectively, with passenger growth at 31.2%.

As of now, we maintain NEUTRAL with a revised TP of Rs 119, based on 12x FY19-EPS. SpiceJets 1QFY18 results came in slightly below expectations. Revenue grew 23% to Rs 18.7bn, as yield improved 4%. PAT was up 17.6% at Rs 1.8 bn. ASKM/RPKM growth was strong at 18.3%/20.5% respectively, with passenger growth at 18.4%.

SpiceJets 4QFY17 results came in below expectations. Revenue grew by 10% to Rs 16.3bn, below our expectation of 12%. This was primarily owing to higher-than-expected yield pressure, and the decline of other operating income. During the quarter, yield was down 5.6%, against expectation of 4.6%. Adj. PAT was down 41% at Rs 0.4bn.

SpiceJet?s 3QFY17 results came in below expectations. Revenue grew by 12% to Rs 14.6bn, below our expectation of 15% primarily due to higher-than-expected pressure on yield. During the quarter, yield was down 9.5% as compared to our estimate of 7%. Adj. PAT was down 41% to Rs 1.4 bn

SpiceJets (SJ) 2QFY17 revenue grew by robust 34.6% to Rs 14bn, in-line with expectations. Passenger & ancillary revenue increased by 35.2% & 27.4%. ASKM/RPKM (scheduled) was up by 33/34% YoY and -1.1/-1.3% QoQ. The contribution of Non-schedule (Chartered plane) ASKM was 3%. Yield increased marginally to Rs 3.5 but was better than peers.

SpiceJet’s (SJ) 1QFY17 APAT at Rs 1.5bn (+2% QoQ), was above our estimates of Rs 1.2bn. Passenger revenues were in line (+5% QoQ, passengers carried +4%, yield +2%) with our estimates. Ancillary revenue was flattish QoQ (+64% YoY) to Rs 1.6bn owing to the back ended introduction of various services. EBITDA increased 112% QoQ (+53% YoY). The sharp rise was based on one time maintenance expenses last quarter.

While the management is upbeat about the ongoing turnaround strategy, possible rise in crude oil prices are worrying. SJ is likely to continue focusing on ancillary revenue and cost rationalisation. They maintain our NEUTRAL rating, with a TP of Rs 70 based on 6x FY18E EV/EBITDAR and expected dilution with 189mn warrants. However, clear upside is expected in case no dilution plays out (decision pending).