SpiceJet gains for seventh straight day; stock surges 9% on heavy volumes

Shares of SpiceJet were trading higher for the seventh consecutive session, surging 9 per cent intra-day, to trade at Rs 144 apiece on the BSE on Wednesday supported by heavy volumes.

During the past week, the airline's stock has rallied 23 per cent as against a per cent rise in the benchmark index. Jet Airways and InterGlobe Aviation (parent company of IndiGo), on the other hand, have tanked 20 per cent and 6 per cent respectively during the same period.

“While SpiceJet is a key beneficiary of slots vacated by Jet Airways at the constrained airports, it would be interesting to see how it capitalizes on the same even as it has commenced operations on some of the highly competitive metro routes," analysts at SBICAP Securities said adding, "Sector consolidation is an opportunity for the company to recoup lost market share but the ability to profitably deploy the massive increase in capacity will be the key to the stock’s performance”.

It further added that substantial delays in resuming Max operations may impact capacity growth for the airline. For SpiceJet, early resolution on 737 Max is important to get the most out of its cost-reduction measures, it added.

For the quarter ended June 2019 (Q1FY20), analysts at Edelweiss Securities expect SpiceJet to post six-fold year on year (YoY) jump in net profit at Rs 154 crore. It had profit of Rs 25 crore in a year ago quarter.

“Yield expansion (+5 per cent YoY) would be lower than Indigo; however, coupled with robust PAX growth (+25 per cent YoY), revenue will increase by 36 per cent YoY. Lower aviation turbine fuel (ATF) prices (- 1.2 per cent YoY) will lead to earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) close to doubling YoY. Non fuel CASK will remain elevated due to significant surge in aircraft capacity during the quarter,” the brokerage firm said in quarterly preview.

At 03:21 pm, the stock was up 8 per cent at Rs 142, as compared to a 0.20 per cent rise in the S&P BSE Sensex. The trading volumes on the counter jumped two-fold with 4.26 million shares changing hands on the BSE so far.