Nuvama Institutional Equities retained its ‘Hold’ rating on SpiceJet, with a target price of Rs 48 on SpiceJet despite reporting robust numbers for Q4FY25. The sharp drop in the carrier’s available seat kilometres (ASKMs) to 29% YoY due to higher Aircraft on Ground (AoG) is a key concern. That apart, operational fleet expansion is likely delayed given no material change in fleet post a QIP of Rs 3,000 crore and resultant restructuring of lessors’ dues.
Nuvama on SpiceJet: Operation fleet lower
SpiceJet’s operational fleet was 25 aircraft at the end of March 2025, which was lower than the 28 aircraft disclosed at the end of June 2024 at the time of QIP closure in September 2024.
This indicates an inability to expand the operational fleet even after the restructuring of the lessors’ dues.
Nuvama on SpiceJet: Impact on average passenger revenue
Furthermore, SpiceJet’s management is evaluating the impact on passenger revenue per available seat kilometre (PRASK) for Q1 FY26 in the wake of geopolitical tensions. However, they have observed a materially adverse impact on cancellation rates and booking trends, which does not bode well for the industry as a whole, including Spice Jet.
Nuvama on SpiceJet: EBITDAR offsets operational weakness
The low-cost carrier’s Q4 FY25 earnings before interest, taxes, depreciation, amortisation, and rent (EBITDAR) came in at Rs 220 crore, rebounded from a negative EBITDAR of Rs 14 crore in Q4 FY24. In Q4 FY25, EBITDAR was led by a sharp rise in yields, which were up 28%, offsetting the weakness in ASKM, revenue passenger kilometres (RPKMs), and
passenger load factor (PLF), while cost per available seat kilometre (CASK) stayed flat YoY at Rs 4.8.
The Q4 FY25 marked a stronger-than-expected yield environment due to the 45-day Maha Kumbh festival and the carrier’s focus on non-metro destinations under the UDAN scheme.
The cost per available seat kilometre came in flat YoY as negative operating leverage offset the fall in overheads due to a reduction in fleet size. The average fuel cost also decreased 6% YoY, underperforming the 9% cut in ATF prices due to increased VAT rates in certain states.
SpiceJet stock performance
The share price of SpiceJet has risen 0.6% in the last five trading sessions. The stock has fallen over 5% in the past one month and 25% in the last six months. SpiceJet’s share price has erased 20% of investors’ wealth in the past one year.