Buy Spicejet; target of Rs 91: Edelweiss

Edelweiss is bullish on Spicejet has recommended buy rating on the stock with a target price of Rs 91 in its research report dated November 25, 2016.
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Dec 01, 2016, 05.55 PM | Source: Moneycontrol.com

Buy Spicejet; target of Rs 91: Edelweiss

Edelweiss is bullish on Spicejet has recommended buy rating on the stock with a target price of Rs 91 in its research report dated November 25, 2016.

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Buy Spicejet; target of Rs 91: Edelweiss

Edelweiss is bullish on Spicejet has recommended buy rating on the stock with a target price of Rs 91 in its research report dated November 25, 2016.

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Edelweis's research report on Spicejet

SpiceJet’s (SJ) INR 589mn profit in Q2FY17 surprised positively as sustained yield pressure in a lean quarter had kept expectations muted. The 3% YoY yield dip was much lower than that reported by peers. Key quarter highlights were: a) dip in non-fuel costs driven partly by increase in average stage length and renegotiation with vendors; and b) fall in aircraft lease rentals on conversion of wet to dry lease and pricing rationalisation. While operating parameters and yield/cost management continue to be healthy, balance sheet remains vulnerable to near-term liability risk arising from the HC order, amidst settlement of past dues. Factoring in a resilient Q2FY17, we retain ‘BUY’ with revised TP of INR 91 (INR 87 earlier).

While operating parameters and yield/cost management continue to be healthy, balance sheet remains vulnerable to near-term liability risk arising from the HC order on warrants issue, amidst settlement of past dues. At CMP, the stock trades at 6.3x FY17E and FY18E EV/EBITDAR, respectively. We value the stock at 7.5x FY18E EV/EBITDAR (assuming dilution from impending warrants issue). We maintain ‘BUY’ with target price of INR 91.

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The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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