Dec 01, 2016 11:27 AM IST IST | Source: Moneycontrol.com
Buy SpiceJet; target of Rs 115: Prabhudas Lilladher
Prabhudas Lilladher is bullish on SpiceJet has recommended buy rating on the stock with a target price of Rs 115 in its research report dated November 28, 2016.
Prabhudas Lilladher's research report on SpiceJet
With healthy growth in Available Seat Kilometres (ASK) at 33% YoY and ancillary service revenues growing 27.4% YoY, SpiceJet (SJ) had robust YoY revenue growth during Q2FY17. YoY lower Fuel CASK also resulted in strong 85.9% YoY growth in adjusted EBITDAR, which met our expectations. With lower than expected lease rental costs, profit was higher than expectations at Rs589m (PLe: Rs 320m), as compared to an adjusted loss YoY.
Passenger Load Factor (PLF) remained high through Q2FY17 for SJ and is expected to continue through FY17. While Q2 is a seasonally sluggish period for the aviation industry, focus on cargo and other ancillary services is expected to provide revenue growth ahead for SJ in H2. We also note that the high PLF should enable SJ some flexibility in pricing action if required in the event of a sharp increase in crude price. We maintain our estimate and target price and re‐iterate a “BUY”.
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