SpiceJet – A solid turnaround?

SpiceJet is an Indian budget airline headquartered in Gurgaon, Haryana. It is the second largest airline in India by number of domestic passengers carried, with a market share of 13.6% as of March 2019. The airline operates 630 daily flights to 64 destinations, including 54 Indian and 15 international destinations from its bases at Delhi and Hyderabad.

Established as air taxi provider ModiLuft in 1994, the company was acquired by Indian entrepreneur Ajay Singh in 2004 and renamed to SpiceJet. The airline operated its first flight in May 2005. Indian media baron Kalanidhi Maran acquired a controlling stake in SpiceJet in June 2010 through Sun Group which was sold back to Ajay Singh in January 2015. The airline operates a fleet of Boeing 737 and Bombardier Dash 8 aircraft.

Quarterly Earnings Walkthrough

SpiceJet Ltd has registered a 365% Year-on-Year (YoY) surge in third-quarter profit, as the embattled low-cost carrier received support from heightened demand for air travel. The airline operator reported that its profit rose to ₹107 crore for the third quarter as compared with ₹23 crore in the corresponding of the previous year.

The airline’s revenue from operations has risen by a small 2.5 per cent to ₹2,357 crore for the third quarter from ₹2,259 crore in the previous year quarter.

SpiceJet had the highest passenger load factor amongst all its airline peers in India. The average domestic load factor was 91 per cent for the December quarter. The airline has initiated 15 new routes and operated 254 charter flights in the quarter. Despite a big increase in passenger traffic, the airline business faced the impact of high fuel prices and depreciating Rupee.

Word from the Board

Ajay Singh, Chairman and Managing Director, SpiceJet, said, “We exceeded our operational targets and continued with our unmatched performance clocking the highest load factor for every single month in 2022. The profits have been driven by a strong performance in both our passenger and cargo businesses.”

Singh continued with “There are renewed signs of recovery and some very positive developments and restructuring initiatives in the immediate offing that would significantly strengthen and deleverage our balance sheet”.

The SpiceJet chairman concluded with “Air travel has come roaring back touching newer heights and giving a glimpse of the huge potential of the Indian aviation market and we look forward to a robust and exciting 2023″.

Technical Analysis

SpiceJet Weekly Candlestick Chart on Sharekhan’s TradeTiger

SpiceJet stock price has plummeted down from the highs and the price takes a strong support at the Rs 30 level. The price is trading below the 50-day exponential moving average and the MFI is at 83 points. The price rose 12% after the company declared its December quarter results. This stock has poor fundamentals, and the company has been reported numerous losses over the years. Investors should be cautious and avoid this stock.

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