Budget carrier SpiceJet’s Board will decide on the proposal to raise $100 million to infuse fresh equity into the airline in a meeting on December 11.
In a filing on Wednesday, the low-cost carrier informed that its board will meet on Monday to discuss and consider options for raising fresh capital through the issue of equity shares or convertible securities on a preferential basis.
The proposal, if approved, will be subject to shareholders’ approval and other regulatory approvals. Subsequently, the airline’s stock jumped 20% on the BSE, hitting the upper circuit on Thursday afternoon.
According to industry insiders, a substantial equity infusion into the airline will lead to more capacity addition and, in turn, increase its market share.
“A correction in SpiceJet’s stock prices was long overdue, considering its fundamentals and growth prospects. This SpiceJet is an attractive investment opportunity, offering substantial growth potential and attractive returns for investors,” an industry expert told FE.
“SpiceJet, with a market capitalisation of just around Rs 4,000 crore, appears to be significantly undervalued when compared to its peers in the Indian aviation industry,” he said.
At present, the airline holds slots and routes at most domestic and international airports like Dubai. It also has a significant plane order, indicating a commitment to expanding its fleet and market presence.
Other industry watchers said that it would require such funds to lease more aircraft and clear debt.
Currently, it has an operational fleet of 41 aircraft. It connects more than 30 domestic and regional destinations and seven international destinations.
The board will also consider and approve the unaudited standalone and consolidated financial results for Q2 ended September 30. For Q1FY24, the airline reported a standalone net profit of Rs 204.56 crore from a net loss of Rs 788.83 crore a year ago.