Sell SpiceJet; target of Rs 32: Prabhudas Lilladher

Prabhudas Lilladher is bearish on SpiceJet has recommended sell rating on the stock with a target price of Rs 32 in its research report dated August 03, 2020.

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August 08, 2020 / 12:34 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on SpiceJet

We cut FY22 and FY23 EBITDAR estimates by 25% & 20% 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 weak 4Q20 operational numbers with RASK (excl Boeing compensation) down 7.4% while non-Fuel CASK increased by 33.5% due to Covid-19 led disruption with operations being suspended in late March. While market leader Indigo reported 1% yield growth in the same period, SJET reported 10% decline in yields despite industry leading load factors impacted by 1) increased exposure to intensely competitive metro to metro routes and 2) dual class fleet operations. SJET continues to negotiate with Boeing regarding compensation for the grounded Boeing 737 Max, we shall keep a close eye on payment terms and actual flow of compensation.

Outlook

Given the demand uncertainty and weak balance sheet we value the stock at 7x Sept22 adj. EV/EBITDAR arriving at target price of Rs32. Downgrade to Sell.

For all recommendations report, click here