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  1. Airline stocks nosedive

Airline stocks nosedive

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.

By: | Mumbai | Published: May 4, 2018 2:31 AM
Indigo, Spicejet, Jet Airways, airline, stock, aircraft, flights, plane Analysts indicate that there is an expectation of Jet Airways posting even weaker results than Indigo, and Spicejet.

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.

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