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Elara Capital
SpiceJet (Buy)
CMP: ₹92.65
Target: ₹189
SpiceJet Q2FY20 adjusted PAT (adjusted for ₹190 crore forex gain) was at a loss of ₹269 crore vs our estimates of a PAT loss of ₹109 crore vs consensus at ₹328 crore. This was based on a higher CASK of ₹4.14/seat-km vs our estimates of ₹3.98/seat-km, lower PLF of 89 per cent from 93 per cent in Q2FY19 vs our estimates of 93 per cent, partially offset by an increase in passenger yield by 15 per cent y-o-y to ₹3,995 vs our estimates of ₹4,478 and a 737 per cent rise in other income as the company had included claims receivable from Boeing for the grounding of 13 737 MAX aircraft. Fuel CASK was down 9 per cent y-o-y to ₹1.5/seat-km below our estimates vs our estimates of ₹1.44/seat-km and non-fuel CASK at ₹2.64/seat-km vs our estimates of ₹2.54/seat-km
Valuation: We reiterate our ‘Buy’ rating with a revised TP of ₹189 from ₹203 as we rollover to FY22E. We expect PAT to turn positive in FY21E with the 737 MAX aircraft coming back into operations to improve fuel efficiency from newer aircrafts by 15-20 per cent, along with a 4 per cent revenue yield growth to improve profit.
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