Aviation cos jump 10% as InterGlobe set to enter market

By: |
Mumbai | Published: October 20, 2015 12:13:05 AM

SpiceJet hits upper circuit, Jet Airways rises 9%

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.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.