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Strong Numbers Set SpiceJet Stock Flying

Strong Numbers Set SpiceJet Stock FlyingGold Silver Reports — Strong Numbers Set SpiceJet Stock Flying — Strong earnings in the June quarter sparked a rally in shares of SpiceJet on Wednesday but analysts warned that upside in the stock may not sustain as investors are increasingly worried that growing volumes are not translating into profits. SpiceJet soared nearly 16% to ` 65.30 on Wednesday . Among rivals, Jet Airways rose 4% and InterGlobe Aviation gained 0.4%. Analysts said second quarter typically is challenging for these companies as it is a lean period for air travel in India. Airlines may have to give a lot of discounts that could hurt profits.

“There is an exciting but turbulent future for avia tion stocks,“ said Raamdeo Agrawal, joint managing director at Motilal Oswal Financial Services. “I remain positive about the volume growth in the sector but whether these volumes will translate into profits is the big question. Competitive pressure on the tariff side is making things challenging.“

Consistent growth of over 20% in passenger traffic in the past six months, benign crude prices of close to $48 per barrel, and high load factor of over 90% and high ca pacity addition have boosted operating reve nues of SpiceJet in the June 2016 quarter by 36% to `1,506 crore on a year-on-year compari son. The company’s lower interest expense, which fell 28% to `20 -on-year basis boosted the crore on a year-on-year basis boosted the company’s profits. Profits jumped more than two times to `149 crore in the quarter under review from the year ago period.

“SpiceJet’s performance was lower than expectations,“ said an analyst from a leading domestic brokerage. “ After Indigo reported its numbers, the expectations were lower which ended up being a positive for the stock.“ — Neal Bhai Reports

Strong Numbers Set SpiceJet Stock Flying

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