Expect 30% appreciation in Jet Airways: Tambe

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Expect 30% appreciation in Jet Airways: Tambe

Rajesh Tambe, HOR, Sunchan Securities is of the view that one can expect 30% appreciation in Jet Airways. It is the first one who came in along with the other players. But subsequently the other players went into locked stock in barrel and Jet Airways right from the beginning has done very well for themselves.

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Excerpts from Your Stocks on CNBC-TV18 Watch the full show » RELATED NEWS Buy Jet Airways; target of Rs 1400: CLSA JetLite gets clearance for Amritsar-Bangkok operationss Jet Airways hits new high ALSO READ See previous views by Rajesh Tambe See what other Experts & Brokerages are saying about Kingfisher Air See messages about Kingfisher Air Kingfisher Air BSE | NSE 28/05/12 Are Mutual Funds betting on Kingfisher Air? Other Stocks in this news Jet Airways |

Rajesh Tambe , HOR, Sunchan Securities is of the view that one can expect 30% appreciation in Jet Airways . It is the first one who came in along with the other players. But subsequently the other players went into locked stock in barrel and Jet Airways right from the beginning has done very well for themselves.

Tambe told CNBC-TV18, "As far as the merging is concerned Jet Airways definitely had a 40% of the market shares. Sahara had a market share of something around 10-12%. But evidences in the world have shown that when you are doing a merger when you have a similar product and when you don't have a similar product. I would support it with an example like when the Hindustan Lever took over Brooke Bond nothing great happened with Brooke Bond. They took over Kimberley-Clark they have not been able to add any values to it. They took over Kisan nothing much has happened into it. There are certain products, which have been added, and in the meantime these companies have discontinued these products also. So the evidences in the History proves that the merger is not the right thing maybe what is more important is that you expand with your existing infrastructure."

He further added, "Jet Airways is the first one who came in along with the other players when you had ModiLuft and Damania's and the other airlines. But subsequently we have seen that the other players went into locked stock in barrel and Jet Airways right from the beginning has done very well for themselves. Today the company has got the operating profit of 19.19%, which is at Rs 1,352 with a total turnover of Rs 7,057 crore. Net profit is also not bad because their operating margins have gone down it is only for the reason that more of the fierce competition is coming in with the prices going down."

"Secondly, Jet Airways had a big hit because it was always thought that the company is being backed as far as their finances are concerned by the underworld for which the case was pending in the court. But now since the clean chit has been given, so the sentiments in the market were also that the people were not backing or having an interest particularly in this scrip."

"Now we also look that particular scrip has to be supported by the mutual fund, which is very important. So that the two companies which are in the aviation sector, which are doing probably very well, which are supported by the mutual fund one is Deccan Aviation, which is the part of the Kingfisher. But let us understand that even these two companies Kingfisher and Deccan Aviation has also got a consolidated loss of Rs 800 crore. So only that man who has got deep pockets and who's got a holding company, which is a cash rich company, can only run these companies."

"In Jet Airways there is a potential and at Rs 1,000 one can see an appreciation of 30 to 40% in another 4 to 6 months and the issue price of the share was also almost at Rs 800 or Rs 900 and it is still ruling at the same level. So I clearly see an appreciation of 30% because there is a big market and there is a demand for it."

Disclosure: Analyst and his clients hold Fortis, India Cements and to a certain extend Lanco and IFCI.