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Centrum Broking
SpiceJet (Sell)
Target: ₹46
CMP: ₹48.85
SpiceJet’s Q1-FY21 performance remained impacted due to disruption of operations amid Covid-19. However, net loss of ₹590 crore was lower than our estimate of ₹890 crore led by higher cargo revenues and lower employee and fuel costs.
Cargo revenue increased sharply by 144 per cent y-o-y to ₹₹236 crore. Revenue declined 82.9 per cent y-o-y to ₹510 crore and EBITDAR loss came in at ₹26.5 crore. Total available seat kilometres (ASK) declined 89.7 per cent y-o-y to 703m, Revenue passenger kilometres (RPK) declined 98.3 per cent y-o-y to ₹48.70 crore.
Domestic load factor stood at 66.5 per cent. Ticket yield grew sharply by 8 per cent y-o-y to ₹4.5 and while RASK (Revenue per Available Seat-Kilometre) stood at ₹9.3 driven by change in revenue mix (skewed towards cargo).
SpiceJet was in urgent need of capital infusion even prior to Covid and the present crisis has only accentuated the liquidity crunch. SpiceJet continues to aggressively cut costs, re-negotiate contract terms and defer payments. However, there are material uncertainties on its ability to continue deferring its obligations and unwind them in the absence of any external funding support or any relief from the government. This makes the risk reward unfavourable.
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