Hold SpiceJet; target of Rs 53: Prabhudas Lilladher

Prabhudas Lilladher's research report on SpiceJet

We cut FY22 and FY23 EBITDAR estimates by 3.6% & 1.4% respectively given 1) sluggish scale up of operations due to localized lockdowns and 2) low consumer confidence due to rising incidence of Covid-19 cases SJET reported better than expected 1Q21 unit revenues with operating RASK growing by 65% aided by ~8x increase in ancillary revenues (largely cargo), while yields improved by 12.3% YoY. However, the reduced scale of operations impacted costs with non-Fuel CASK growing 6.3x to Rs17.2.

Outlook

We value the stock at 7x FY23 adj. EV/EBITDAR (earlier Sept-22) and arrive at a target price of Rs53. Upgrade to Hold from Sell.