Q1FY19 result highlights
Key positives: Stronger yields compared to peers.
Key negatives: Increase in fuel prices and weakening of INR.
Impact on financials: Downgrade in FY19E/20E earnings by 28.3%/4% respectively, due to elevated fuel cost and MTM fx loss.
Valuations & view
SpiceJet continues to reap benefits of its increased non-metro/regional focus by way of strong passenger growth and higher fares/yields. We expect SpiceJet to be better placed to pass on the recent surge in crude prices (albeit with a lag) due to its niche route strategy. The stock trades at 8.1x/6.6x FY19E/FY20E EV/EBITDAR and we value SpiceJet at 7.4x FY20E EBITDAR (in line with global peers). We maintain Outperformer with a revised price target of Rs126.
Spicejet Ltd is an India-based company engaged in transportation of passengers by air. The Company is engaged in the business of scheduled air transport services. Its geographical segments include India and others. It provides air transport services for the carriage of passengers and cargo. The Company is a low cost carrier (LCC) operating under the brand name of Spice Jet in India. The Company operates a fleet of approximately 40 aircraft, including approximately seven aircraft taken on wet lease across various routes in India and abroad. The Company's spice add-on includes spice cash/spice club, SpiceMax, hot meals, SpiceCash Top-up, priority check-in, Spice talk, track Spicetalk request, bag out first, carry more onboard, fly for sure, Spice lounge, my flexi plan, reliance travel insurance, Spice assurance, Spice flex, friends and family, senior citizen discount, student discount, Indian armed forces personnel and red hot offers.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
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