indiabull
14-12-2007, 06:56 AM
Prabhudas Lilladher has initiated Jet Airways with a ‘buy’ call and target price of Rs 1,498. Jet Airways, the oldest private carrier in the industry having a fleet size of 71 and market share of 22.5 per cent, is considered the most preferred carrier in the country.
The recently bagged 'Best Full Service Carrier' by Galileo Express Travel award and the Best Airline Award by TTG Travel Asia (4th time in the last five years) speaks volumes of its world-class in-flight service and high levels of reliability among domestic carriers, says the brokerage.
Post the acquisition of Sahara (now JetLite), Jet is the only private carrier having rights to fly on international routes. JetLite would fly as a value based low cost carrier.
The business model of Jet now has a mix of low cost carrier and a full service carrier that works best in a growing country like India. Jet also transitions between regional (short haul) and international carriers (long haul) and is poised to emerge as a strong player in either forms of business.
This inherent strength will see Jet post a three year CAGR growth in revenue of 22 per cent to Rs 16,500 crore by 2009-10. By 2009-10 estimate, Jet will have a much improved EBIDTAR at 19 per cent that will give a net profit of Rs 840 crore (from a loss of Rs 660 crore in 2006-07), the brokerage said. Jet is currently trading at 1.6 times 2008-09 estimate and 1.4 times 2009-10 estimate adjusted enterprise value per sales.
Prabhudas has initiated ‘buy’ on the stock for target Rs 84. SpiceJet is the most efficient low cost player in the industry. With a fleet size of 11 in 2006-07 and passenger load factor of about 77 per cent, the company has a market share of about 8 per cent.
SpiceJet's identical fleet configuration (all B737-800s) helps reduce its operational costs. Also, the absence of food on board helps it achieve a better turnaround. Irrational pricing prevalent in the industry a couple of years back has largely ceased. With improving yields and the lowest cost per ASKM in the industry, Spice is poised for a turnaround.
The company has also started focusing on ancillary revenue to further boost sales. The share of ancillary revenue is expected to go up to 10 per cent (from 7-7.5 per cent earlier) in 18 months.
Prabhudas expects the company to achieve profitability in 2008-09. SpiceJet is currently trading at 2.0 times 2008-09estimate and 1.7 times 2009-10 estimated adjusted enterprise value per sales, which appears attractive for a growing company. Prabhudas expects topline to grow at 64 per cent CAGR over the next three years to Rs 2,823.9 crore by 2009-10 and achieve profit after tax of Rs 76.1 crore (from a loss of Rs 70.8 crore in 2006-07).
The recently bagged 'Best Full Service Carrier' by Galileo Express Travel award and the Best Airline Award by TTG Travel Asia (4th time in the last five years) speaks volumes of its world-class in-flight service and high levels of reliability among domestic carriers, says the brokerage.
Post the acquisition of Sahara (now JetLite), Jet is the only private carrier having rights to fly on international routes. JetLite would fly as a value based low cost carrier.
The business model of Jet now has a mix of low cost carrier and a full service carrier that works best in a growing country like India. Jet also transitions between regional (short haul) and international carriers (long haul) and is poised to emerge as a strong player in either forms of business.
This inherent strength will see Jet post a three year CAGR growth in revenue of 22 per cent to Rs 16,500 crore by 2009-10. By 2009-10 estimate, Jet will have a much improved EBIDTAR at 19 per cent that will give a net profit of Rs 840 crore (from a loss of Rs 660 crore in 2006-07), the brokerage said. Jet is currently trading at 1.6 times 2008-09 estimate and 1.4 times 2009-10 estimate adjusted enterprise value per sales.
Prabhudas has initiated ‘buy’ on the stock for target Rs 84. SpiceJet is the most efficient low cost player in the industry. With a fleet size of 11 in 2006-07 and passenger load factor of about 77 per cent, the company has a market share of about 8 per cent.
SpiceJet's identical fleet configuration (all B737-800s) helps reduce its operational costs. Also, the absence of food on board helps it achieve a better turnaround. Irrational pricing prevalent in the industry a couple of years back has largely ceased. With improving yields and the lowest cost per ASKM in the industry, Spice is poised for a turnaround.
The company has also started focusing on ancillary revenue to further boost sales. The share of ancillary revenue is expected to go up to 10 per cent (from 7-7.5 per cent earlier) in 18 months.
Prabhudas expects the company to achieve profitability in 2008-09. SpiceJet is currently trading at 2.0 times 2008-09estimate and 1.7 times 2009-10 estimated adjusted enterprise value per sales, which appears attractive for a growing company. Prabhudas expects topline to grow at 64 per cent CAGR over the next three years to Rs 2,823.9 crore by 2009-10 and achieve profit after tax of Rs 76.1 crore (from a loss of Rs 70.8 crore in 2006-07).