Moneycontrol
Dec 05, 2017 12:46 PM IST | Source: Moneycontrol.com

IndiGo, SpiceJet and Jet Airways in focus as HSBC initiates coverage

While Interglobe Aviation (IndiGo) gained over 1.5 percent, SpiceJet and Jet Airways were trading on the lower side.

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Aviation stocks were in focus on Tuesday after global brokerage firm HSBC initiated coverage on major stocks.

While Interglobe Aviation (IndiGo) gained over 1.5 percent, SpiceJet and Jet Airways were trading on the lower side.

On IndiGo, HSBC initiated with a buy rating and a target of Rs 1,500.

Among positives for the stock, it said that best balance of market positioning, comparatively high FCF and dividend yield, and the strongest balance sheet.

Further, it expects market share to increase by another 5 percentage points by March 2021. While costs are 15-30 percent below peers, fleet modernization will reduce this further. Going forward, it expects net profit to grow at CAGR of 37 percent by March 2020.

Meanwhile, HSBC also initiated with a buy call on SpiceJet and a price target of Rs 180. It expects traffic to grow at CAGR of 18.5 percent by March 2020.

Further, its bulk order for 200 aircraft will help in regaining market share. The airline could also be debt free by March 2019.

On Jet Airways, it has initiated hold with a target of Rs 600. It highlighted how the firm was highly leveraged and faces a tough debt repayment schedule. Weaker Gulf demand is hurting profitability and expansion on other international routes to help the airline. Going forward, it expects net profit to grow at CAGR of 9 percent by March 2019.

At 11:40 hrs Interglobe Aviation was quoting at Rs 1,145.55, up Rs 2.70, or 0.24 percent. SpiceJet was quoting at Rs 139.60, down Rs 1.05, or 0.75 percent. Meanwhile, Jet Airways was quoting at Rs 634.50, down Rs 9.60, or 1.49 percent.
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