Multibagger Airline Company Sees Surge in Stock Value

In a significant development, Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) have collectively acquired a 6.66% stake in SpiceJet Ltd, a multibagger airline company. The stock has witnessed a remarkable surge of 9.85% to reach an intraday high of Rs 57 per share, up from its previous closing of Rs 51.89. This impressive growth has been driven by the company’s turnaround performance in the fourth quarter of FY2024 (Q4FY24).

SpiceJet, India’s favorite airline, has made flying more affordable for Indians than ever before. With a fleet of Boeing 737s and Q-400s, the company operates multiple daily flights under the Regional Connectivity Scheme (UDAN). The majority of its fleet offers SpiceMax, the most spacious economy-class seating in India.

The company’s quarterly results have been impressive, with net sales of Rs 1,738.38 crore in Q4FY24. Operating profit increased by 18.4% to Rs 401.33 crore, while net profit jumped to Rs 126.87 crore, a significant improvement from the net loss of Rs 6.22 crore in Q4FY23. SpiceJet’s financial performance has improved substantially, with a narrowing of losses by nearly 73% to Rs 409 crore in FY2024, compared to the previous year’s Rs 1,503 crore. The airline’s EBITDA increased to Rs 772 crore from a negative Rs 33 crore, and EBITDAR grew to Rs 1,410 crore from Rs 342 crore in the prior year.

The company has also achieved an industry-leading domestic load factor of 92%, contributing to an 8% improvement in passenger Revenue per Available Seat Kilometer (RASK) due to a combination of higher yield and load factor. Additionally, SpiceJet has strengthened its financial position by increasing its net worth by 20% to Rs 646 crore compared to the previous fiscal year.

SpiceJet has secured an in-principle approval from the Bombay Stock Exchange (BSE) for a potential Rs 2,242 crore capital infusion and has already raised Rs 1,060 crore through preferential share issuance in two phases. The company has also resolved a USD 22.5 million dispute with Export Development Canada, cleared Rs 755 crore in liabilities, and settled over USD 50 million owed to various lessors.

Ajay Singh, Chairman and Managing Director of SpiceJet Ltd, expressed confidence in the company’s growth prospects, stating that “We are well-positioned to soar even higher in the coming quarters. We are exploring opportunities to raise fresh funds to further bolster our growth plans and take advantage of the burgeoning demand in the Indian aviation market.”

The company’s market capitalization stands at over Rs 4,400 crore. According to the shareholding pattern of March 2024, FIIs increased their stake to 1.73%, while DIIs increased their stake to 5.30%, compared to 0.33% and 0.04% in December 2023, respectively. The stock has given multibagger returns of over 100% from its 52-week low of Rs 28 per share, outperforming the BSE Small-Cap Index, which has risen by 60% in the same period.

Investors should keep a close eye on this small-cap stock, which has the potential to continue its upward trajectory.

Historical Context:

The Indian aviation industry has been growing steadily over the years, driven by increasing demand for air travel and government initiatives such as the Regional Connectivity Scheme (UDAN). SpiceJet, one of the country’s largest low-cost carriers, has been a major beneficiary of this growth. The airline has been expanding its fleet and route network, and has been focusing on improving its financial performance.

In recent years, SpiceJet has faced some challenges, including a major crisis in 2019 when it grounded its entire fleet due to a cash crunch. However, the airline has since made significant progress in turning around its fortunes, with a focus on cost-cutting, route optimization, and improving its financial performance.

In 2020, SpiceJet’s new chairman and managing director, Ajay Singh, took over the reins of the company and implemented a turnaround strategy. The airline has since reported several quarters of profit, and has been expanding its fleet and route network.

The company’s financial performance has been impressive, with a narrowing of losses and an increase in net worth. SpiceJet has also been able to reduce its debt and has secured an in-principle approval for a potential Rs 2,242 crore capital infusion.

Summary in Bullet Points:

• SpiceJet’s stock has surged 9.85% to reach an intraday high of Rs 57 per share, driven by the company’s turnaround performance in Q4FY24. • FIIs and DIIs have collectively acquired a 6.66% stake in the company. • SpiceJet’s quarterly results have been impressive, with net sales of Rs 1,738.38 crore, operating profit of Rs 401.33 crore, and net profit of Rs 126.87 crore. • The company’s financial performance has improved substantially, with a narrowing of losses by nearly 73% to Rs 409 crore in FY2024. • SpiceJet has achieved an industry-leading domestic load factor of 92%, contributing to an 8% improvement in passenger Revenue per Available Seat Kilometer (RASK). • The company has strengthened its financial position by increasing its net worth by 20% to Rs 646 crore. • SpiceJet has secured an in-principle approval for a potential Rs 2,242 crore capital infusion and has already raised Rs 1,060 crore through preferential share issuance. • The company has resolved a USD 22.5 million dispute with Export Development Canada and cleared Rs 755 crore in liabilities. • SpiceJet’s market capitalization stands at over Rs 4,400 crore, and the stock has given multibagger returns of over 100% from its 52-week low of Rs 28 per share. • Investors should keep a close eye on this small-cap stock, which has the potential to continue its upward trajectory.