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    Company Overview: Source: Investor Presentation Q4 2019

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    Radhika Iyer
    SpiceJet is an Indian low-cost airline founded in 2005 that is headquartered in Gurgaon, India. For the year ending March 2019, SpiceJet had a fleet size of 100 aircraft, a 13.7% share of the domestic market, and the industry's highest domestic load factor of 93%. While the company reported a net loss for the full year, it was profitable in the fourth quarter despite grounding Boeing 737 MAX aircraft.

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    Company Overview: Source: Investor Presentation Q4 2019

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    Radhika Iyer
    30 views10 pages
    SpiceJet is an Indian low-cost airline founded in 2005 that is headquartered in Gurgaon, India. For the year ending March 2019, SpiceJet had a fleet size of 100 aircraft, a 13.7% share of the domestic market, and the industry's highest domestic load factor of 93%. While the company reported a net loss for the full year, it was profitable in the fourth quarter despite grounding Boeing 737 MAX aircraft.

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    Financial Analysis of Spicejet

    Original Title

    Spice Jet

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    SpiceJet is an Indian low-cost airline founded in 2005 that is headquartered in Gurgaon, India. For the year ending March 2019, SpiceJet had a fleet size of 100 aircraft, a 13.7% share of the domestic market, and the industry's highest domestic load factor of 93%. While the company reported a net loss for the full year, it was profitable in the fourth quarter despite grounding Boeing 737 MAX aircraft.

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    30 views10 pages

    Company Overview: Source: Investor Presentation Q4 2019

    Uploaded by

    Radhika Iyer
    SpiceJet is an Indian low-cost airline founded in 2005 that is headquartered in Gurgaon, India. For the year ending March 2019, SpiceJet had a fleet size of 100 aircraft, a 13.7% share of the domestic market, and the industry's highest domestic load factor of 93%. While the company reported a net loss for the full year, it was profitable in the fourth quarter despite grounding Boeing 737 MAX aircraft.

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    Company Overview

    SpiceJet is a low cost airline founded by MD- Ajay Singh and headquartered in Gurgaon, India
    founded in 2005.

    Key highlights for the year ending March Key highlights for the quarter ending
    2019: March 2019:

    • Aircraft fleet size of 100 • Company reported a profit of 22%


    • Second largest domestic market share of despite the grounding of Boeing 737
    13.7% MAX aircrafts which could have led to
    • Industry’s highest domestic load factor of losses
    93%. Load factor indicates the capacity • Reported a profit in Q4
    utilization of the aircraft.
    • Capacity in terms of available seat
    kilometer is up by 14%
    • Reported net loss of INR 316.1 crore
    following a net loss INR 427.5 crore in the
    first two quarters
    Source: Investor Presentation Q4 2019
    Aviation market
    Domestic International
    2(a) % Passenger Growth (YoY)
    1(a) % Passenger Growth (YoY) 67%
    71%

    Industry Par 20%


    14% 10% 14%
    24% 19% 19% 24% 20% 5% 7% 10% Industry Par
    13% Spicejet Pax
    5% Spicejet Pax
    FY16Q4 FY17Q4 FY18Q4 FY19Q4
    FY16Q4 FY17Q4 FY18Q4 FY19Q4

    1(b) % Domestic market – Quarter 2(b) % Domestic market – Quarter


    Ending 8.9% Ending 9.1%
    13.7%
    13.2% 8.2%
    12.8% 8.1%
    12.7%
    Spicejet Market Share
    Spicejet Market Share

    FY16Q4 FY17Q4 FY18Q4 FY19Q4 FY16Q4 FY17Q4 FY18Q4 FY19Q4

    Graphs depicting the passenger growth rate and market share of Spicejet in (a) domestic and (b) international markets
    Source: Investor Presentation Q4 2019
    Profitability
    Net Profit FY 2017-18
    8,000.00

    6,000.00
    • EBITDA increased from 6,234 in 2016-17 to 8370
    • EBITDAR increased from 15,840 in 2016-17 to 18,692
    4,000.00 • EAT increased from 4307 in 2016-17 to 5667
    2,000.00
    FY 2018-19
    0.00
    • EBITDA decreased from 8370 in 2017-18 to 484
    -2,000.00 • EBITDAR decreased from 18,739 in 2017-18 to 13,451
    • EAT decreased from 5,667 in 2017-18 to (3161)
    -4,000.00

    -6,000.00
    The company reported losses in the first 2 quarters of 2019 due to
    -8,000.00
    depreciation of rupee and increased fuel prices. It recovered in Q4
    -10,000.00 despite the grounding of Boeing MAX 737 aircrafts. Overall, the
    company has reported profits since 2015, except in 2019.
    -12,000.00
    2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
    Yearly net profit

    All figures are in millions (INR)


    Stock analysis
    • Closely follows industry leader – Indigo
    • Expected market capitalization : Rs 10,500 cr
    Number of shares : 60 cr
    SpiceJet Target price : Rs 175
    (Sarthak Mukherjee, 2019)

    • Current Share price : Rs 123.25


    • Expected Return of 42%
    KEY FINANCIAL RATIOS OF SPICEJET, INDIGO AND-JET MARCH 2019

    FINANCIALS RATIOS SPICEJET INDIGO JET AIRWAY


    VALUATION
    EV/EBITDA 50.10 43.27 15.61
    LIQUIDITY
    CR 0.38 2.26 0.50
    QR 0.34 2.24 0.46
    PROFABILITY
    Return on Equity 90.13 2.24 10.59
    Return on Assets -6.59 0.62 -6.14
    PER SHARE RATIOS
    EPS -5.27 4.06 -67.5
    Future plans
    • SpiceJet and Emirates have signed a Memorandum of Understanding (MoU) to enter into a
    reciprocal codeshare agreement to increase connectivity across America, Europe, Africa
    and the Middle East.
    • Plans to connect all seven North East states with Guwahati
    • Plans to add 35 planes to the fleet and increase total capacity by 80% for FY2020
    • Announced 106 new flights connecting cities with Mumbai and Delhi

    Source: Investor Presentation Q4 2019


    Sector Analysis – Key challenges
    • Disruption in Jet Airways – Spicejet can capitalise
    • Both airlines operate Boeing 737 – Spicejet can amalgamate crew and aircraft
    from Jet airways faster
    • Allocation of slots from Jet’s portfolio to Spicejet by DGCA including 68 prime
    slots in Mumbai
    • Grounding of Boeing 737 Max aircraft
    • Spicejet had to ground 13 aircraft; utilization of high-value inventory reduced
    growth in yields in Q4FY19
    • Return to service of 737 Max flights in August (estimated) and increase in
    capacity (80% ASK growth guidance) expected to improve profitability
    Sector Analysis – Key challenges
    • Aviation Turbine Fuel prices
    • 16.9% decline in ATF prices YoY; crude oil prices steady at $60 – 65/ barrel,
    down from $75-85/ barrel in previous quarters
    • Rupee steady in 69 – 71 per USD range, down from high of 74.33 in October
    2018
    • Steady fuel prices & improvement in fleet fuel efficiency with induction of
    new 737 Max aircraft – improvement in profitability
    Recommendation & Rationale
    • Recommendation: BUY
    • Rationale:
    • Financial
    • Healthy financial ratios as compared to industry benchmark
    • Industry Performance
    • Excellent performance on key metrics with industry leading PLF and
    Revenue per ASK
    • Future Prospects
    • Growing fast with guidance of 80% increase in ASK in FY20
    • Estimated to potentially increase market share by approximately
    5%e
    THANK YOU

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