Our interaction with Kiran Koteshwar, CFO, SpiceJet (SJ), left us enthused about the company’s growth prospects. Soaring crude price notwithstanding, the company has maintained healthy earnings momentum as yields rose 7% YTD and traffic surged a robust 22%. According to the CFO: (i) favourable domestic industry structure will benefit incumbents as demand outstrips capacity addition; (ii) SJ’s yield will continue to clock 3-4% CAGR in the near term, coupled with 8-9% cost savings spearheaded by new generation planes; and (iii) with 12 consecutive profitable quarters, cash flow has improved substantially and SJ expects to be a net cash company by FY19 end. We believe that following a successful turnaround, the company is prudently focusing on profitable growth — has placed mega order for 205 fuel-efficient MAXs (deliveries from August 2018) —and is also consolidating its regional footprint. Outlook & valuations: Robust growth, improving B/S — We estimate industry-leading volume CAGR of 22% driving 37% EPS CAGR over FY17-20. While rising oil price is a concern, yield increase (FY17-20e CAGR: up 3%) and ramp-up of fuel-efficient MAX moderate the impact. We, therefore, estimate RASK-CASK to improve at 27% CAGR over next three years. On FY20e, our TP is Rs 166 with EV/Ebitdar of 8x, assuming 16% dilution from warrants. Maintain Buy. At CMP, the stock trades at 6.5x FY20e EV/Ebitdar.