Hold Jet Airways; target of Rs 258: ICICIdirect

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26 Aug, 2025 12:21

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ICICIdirect.com`s research report on Jet Airways“Jet Airways, consolidated revenues for Q1FY15 grew 12.8% YoY. Standalone domestic and international revenues grew 7.7% YoY and 24.0% respectively, leading to standalone sales growth of 17.0% YoY to Rs 4686 crore. On the other hand, JetLite reported a sharp revenue fall of 23.6% YoY to Rs 354.4 crore. Operating profit for the quarter came in at Rs 49.6 crore on a consolidated basis, remaining lower than our estimated operating profit of Rs 67.1 crore due to higher selling & distribution expenses. However, with exceptional income of Rs 49.5 crore and lower interest costs, net loss for the quarter was lower than our estimates.” “Jet Airways is more focused on the international segment (inbound and outbound traffic) than on the domestic segment as the international segment is more stable and offers higher margins than the domestic segment. As a result, it has been least affected by domestic traffic slowdown in the past two years. Further, it also provides a natural hedge against currency weakness vs. the dollar. During FY11-14, the international segment has outpaced the domestic segment with revenue CAGR of 11% vs. domestic segment (Jet + JetLite) revenue CAGR of 8% during FY11-14. As a result, the revenue share of the international segment has increased to over 53% in FY14 from 51% in FY11. We expect the share of the international segment to enhance to over 60% over the next two or three years with Etihad coming on board through acquisition of a 24% stake in Jet Airways. Etihad has already been given regulatory approval to codeshare on 43 additional routes with Jet Airways bringing total number of services under code share agreement to 71. The new code-sharing agreement will help passengers travelling from the country to connect to Jet Airways codeshare flights on the Etihad network via Abu Dhabi to European destinations including, Amsterdam, Brussels, Dusseldorf, Frankfurt, Geneva, Manchester, Munich, Paris, Dublin and Milan, which are highly in demand. We believe this is one of the big moves to enhance international presence and improve connectivity. This would also help Jet in improving margins over the longer term.” “Despite ongoing challenges on domestic operations, and negative networth, the company is still in a better position to withstand the slowdown with sufficient funds from Etihad Airways. Further, we believe strengthening of the rupee against the dollar would play a key role in margin expansion of domestic segment going forward. Hence, we maintain HOLD on the stock with a revised price target of Rs 258/share (i.e. valuing at 0.6x FY15E EV/sales) implying potential upside of 10%,” says ICICIdirect.com research report.

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