Buy SpiceJet; no AirAsia worry till FY15: BofA-ML
BofA-ML also notes that SpiceJet stock has corrected sharply in the last two month on account of Jet-Etihad deal talks. However, the likely entry of Malaysia‘s AirAsia will also not pose any meaningful impact to SpiceJet‘s existence till FY15, it said.
April 05, 2013 / 22:55 IST
Moneycontrol Bureau
Delhi-based SpiceJet has been doing well in domestic and international skies in terms of market share. The airline has sustained peer pressures in the industry and hence Bank of America Merill Lynch has maintained a 'buy' rating on the company stock but has lowered target price from Rs 51 to Rs 45.The stock closed at Rs 27.80 on Friday. Read This: SpiceJet to grow revenue from Bombardier planesThe BofA-ML in its latest report had said that the carrier is doing well as it is operating on under-served routes. The firm has consistently clocked 80 percent and above load factors on its international network.Justifying why the stock will give around 60 percent returns going forward, the firm says, withdrawal of KFA has helped SpiceJet and will cushion the latter from any further slowdown. The investment banking firm further says that the probable completion of the much talked about Jet Air-Etihad deal will not only boost sentiment in the sector but will also help SpiceJet attract foreign direct investment (FDI) as it is better placed that industry players.BofA-ML also notes that SpiceJet stock has corrected sharply in the last two month on account of Jet-Etihad deal talks. However, the likely entry of Malaysia's AirAsia will also not pose any meaningful impact to SpiceJet's existence till FY15, it said.Additionally, procedural delays in getting the required licenses could delay AirAsia's launch by 1-2 quarters and compared with peers, will have low impact on market share.Meanwhile, the firm expects industry dynamics to remain unchanged in the next one and a half year with modest recovery in traffic by 8-9 percent, year-on-year. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
