Add Kingfisher Airlines; target of Rs 71: ICICIdirect.com

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Add Kingfisher Airlines; target of Rs 71: ICICIdirect.com

ICICIdirect.com is bullish on Kingfisher Airlines and has recommended add rating on the stock with a target of Rs 71 in its September 20, 2010 research report.

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ICICIdirect.com is bullish on Kingfisher Airlines and has recommended add rating on the stock with a target of Rs 71 in its September 20, 2010 research report.

"Kingfisher Airlines is planning a debt restructuring programme that may include fund raising through issuance of equity shares, preference shares or GDRs in order to reduce its debt burden, which stood at Rs 7414 crore at the end of Q3FY10. Kingfisher's board has already given approval for raising funds worth Rs 5000 crore. The airline is planning to raise USD 250 million (~Rs 1100 crore) through GDRs and another Rs 500 crore through domestic offerings. Also, the company is converting Rs 690 crore of its debt to preference share capital."

"At the CMP of Rs 65, the stock is trading at 1.4x and 1.2x its FY11E and FY12E EV/sales. We believe Kingfisher will be the primary beneficiary of the RBI's positive response on the sector's debt restructuring plans which will help the company in its fund raising initiatives. We have changed our outlook on the stock due to a strong improvement in the domestic market and significant effort from the management to improve its financial positions. We value the stock at 1.3x FY12E EV/sales, 9.1% higher than the adjusted mean of the airline's global peers. We have raised our target price to Rs 71 and revised our rating from REDUCE to ADD," says ICICIdirect.com research report.

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To read the full report click on the attachment