SpiceJet Ltd shares have been volatile recently, with the aviation firm now reporting a Rs 431 crore loss for the September quarter and announcing a Rs 2,250 crore capital raise. SpiceJet's cash increase, according to Nuvama Institutional Equities, should allow the carrier to repay outstanding debts and restart select aircraft. However, considering that 40% of its fleet is grounded, as well as a weak balance sheet, the brokerage maintained its 'HOLD' rating on the stock.
SpiceJet Ltd shares have been volatile recently, with the aviation firm now reporting a Rs 431 crore loss for the September quarter and announcing a Rs 2,250 crore capital raise. SpiceJet's cash increase, according to Nuvama Institutional Equities, should allow the carrier to repay outstanding debts and restart select aircraft. However, considering that 40% of its fleet is grounded, as well as a weak balance sheet, the brokerage maintained its 'HOLD' rating on the stock. SpiceJet's board of directors approved a preferential issue of equity shares and warrants to raise new capital. SpiceJet thinks that the additional capital will strengthen its financial situation, allow it to repay existing debts, and give resources for future expansion.
"At the moment, over five aircraft lessors, including Willis Lease Finance, have filed for insolvency against SpiceJet due to non-payment of dues." Furthermore, during Q2FY24, the promoter instilled fresh capital of Rs 500 crore (of which SpiceJet received Rs 200 crore), while SpiceJet entered into a deal with Carlyle Aviation Partners (lessor) to convert its Rs 230 crore loan to equity at Rs 48 per share," Nuvama stated.
SpiceJet reported an EBITDAR of Rs 70 crore in Q2FY24 due to fewer capacities as the number of grounded fleets increased due to operational issues, which was somewhat offset by an increase in PLFs and yields, according to Nuvama. Nuvama said it had decreased its FY25E EBITDAR projection by 4% but raised its target price by 57% from Rs 33 to reflect the possibility of capital infusion.
Nuvama has decreased its FY25 EBITDAR estimate by 4% but increased its target price for the company by 57% to Rs 52 per share from Rs 33 due to the possibility of capital infusion.
