Airline stocks sold off in Thursday’s trade, falling up to 12%, as analysts feared rising fuel prices and a strong dollar would see players post weak results for the last quarter of fiscal 2018. In Thursday’s trade, Jet Airways was the biggest loser, closing 12.28% down at Rs 520.1. InterGlobe Aviation (IndiGo) declined 10.57%, while Spicejet shed 6.14%. The trigger for the sell-off came from the weak performance of IndiGo airlines, which announced its results on Wednesday. In Q4FY18, Indigo’s profit declined 73.2% Rs 117.6 crore against Rs 440 crore a year ago.
In addition, the EPS of the airline declined by almost 75%, i.e. Rs 12.18 to Rs 3.06 in the fourth quarter of FY18. “EBITDAR of Rs 11,320.65 crore came in significantly below our estimate of Rs 14,800 crore due to a lower yield of Rs 3.82 and higher fuel cost of Rs 1.39,” said Motilal Oswal in a report. Analysts indicate that there is an expectation of Jet Airways posting even weaker results than Indigo, and Spicejet.
“While crude oil prices are hovering at $72/barrel, we are modelling $65/barrel for FY19/20. Further increase or even sustenance of current high price levels would pose a downside risk to our earnings estimates,” the report added.