Edelweiss is bullish on Spicejet has recommended buy rating on the stock with a target price of Rs 124 in its research report dated June 13, 2017.
Edelweiss' research report on Spicejet
SpiceJet’s (SJ) Q4FY17 revenue grew 10% YoY to INR 16.3bn. While RPKM growth was robust at 18%, yields corrected 4% YoY (10% fall in Q3FY17). In addition, the 42% YoY surge in fuel CASK led to EBITDAR margin contracting by 365bps to 19.4% and adjusted PAT plunging 78% YoY to INR 416mn.
Revenue and EBITDAR growth for FY17 stood at 22% and 12%, respectively, led by strong passenger growth though rising fuel costs dented margins. We value the stock at 7.5x FY19E EV/EBITDAR (assuming dilution from impending warrants issue) giving us a TP of INR 124. While the stock offers limited upside, we maintain ‘BUY’ on the impending clarity related to the warrants issue.
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