1. Aviation cos jump 10% as InterGlobe set to enter market

Aviation cos jump 10% as InterGlobe set to enter market

SpiceJet hits upper circuit, Jet Airways rises 9%

By: | Mumbai | Published: October 20, 2015 12:13 AM

Stocks of Indian airlines extended gains on Monday in anticipation of expansion in valuations after InterGlobe Aviation fixed an aggressive price band for its initial public offering.

SpiceJet jumped 10% to surge to its highest level in nearly three years. The stock ended at 10% upper circuit at Rs 47.55. The stock gained for the sixth consecutive session, giving returns of more than 60% in the last six sessions and more than 90% in the previous one month.

Jet Airways (India) surged nearly 9% with a near 14-fold increase in trading volume. More than 3.49 crore shares exchanged hands on the BSE and the NSE, compared with 30-day average volume of 25.08 lakh shares. The scrip has risen nearly 40% in last one month.

Sector analysts said aviation companies have directly benefitted from lower fuel costs following a significant fall in global crude oil prices. Aviation turbine fuel or fuel costs account for about 40-50% of total operating expenses of airlines.

The fall in fuel costs also led to an increase in the  passenger load factor. India’s domestic air traffic grew by a healthy 18.66% on year to 67.60 lakh passengers in August, DGCA data showed . SpiceJet posted a passenger load factor of 92.1% in August.

“Domestic passenger airline traffic in India has been growing in healthy double-digits over the year. During this phase, the business models of Indian airlines evolved — Jet Airways increased its focus on the overseas segments (post its tie-up with Etihad) while new entrants such as AirAsia have been cautious in their expansion plans,” JP Morgan analysts Aditya Makharia and Sagar S Sanghavi had said in their note on August 5.

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  1. NC Airways
    Oct 20, 2015 at 6:47 am
    This surge. How bullish it has been made out to be! Is it real? Aviation companies nowadays struggle to meet its own expenses, and to pay 13% interest on its borrowings. How can it be expected to give 20% dividend to its share holders ? Fundamentals of the company will decide. Compare this with a tricycle rikshaw plying in the city. It costs Rs 6000 and gives Rs 35-40 a day. A cool annual return of 180-200% . Can an aircraft come anywhere closer to this performance ? Investors are well adviced to invest in rikshaws and try to find out the things which are not taught in B schools.
    Reply
    1. NC Airways
      Oct 20, 2015 at 7:09 am
      This surge. How bullish it has been made out to be! Is it real? Aviation companies nowadays struggle to meet its own expenses, and to pay 13% interest on its borrowings. How can it be expected to give 20% dividend to its share holders ? Fundamentals of the company will decide. Compare this with a tricycle rikshaw plying in the city. It costs Rs 6000 and gives Rs 35-40 a day. A cool annual return of 180-200% . Can an aircraft come anywhere closer to this performance ? Investors are well adviced to invest in rikshaws and try to find out the things which are not taught in B schools.
      Reply

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