Edelweiss' research report onSpiceJet
Our meeting with Mr. Koteshwar, CFO, SpiceJet (SJ), left us enthused about the company’s growth prospects. From a near collapse, SJ has managed to clock profits in past 10 consecutive quarters and continues to prune debt. Following the turnaround, the company has now renewed focus on profitable growth reflected in a mega aircraft order to capitalise on promising industry dynamics (structural: demand growth to exceed capacity in underpenetrated market; cyclical: benign ATF prices).
OutlookWe envisage reduced risk of warrants dilution (16% dilution versus 32% assumed earlier) and revise our TP to INR150 (8.5x FY19E EV/EBITDAR). At CMP, the stock trades at 9x FY19E EPS. Maintain ‘BUY’.
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