SpiceJet flies lower despite posting consecutive profits
DSIJ Intelligence / 20 May 2016
Shares of the budget carrier have slumped more than 10 per cent on an intraday basis, despite a double digit profit registered by the company. SpiceJet has posted strong QoQ results as compared to the last quarter of the previous fiscal.
Shares of the budget carrier have slumped more than 10 per cent on an intraday basis, despite a double digit profit registered by the company. SpiceJet has posted strong QoQ results as compared to the last quarter of the previous fiscal. There are various reasons for the company’s share decline on Friday, like crude oil price movement; one-time expenditure of Rs 173 crore in FY16 towards stabilising and improving the reliability of it’s fleet; and Delhi High Court case hearing of Kalanithi Maran during the end of May.
Fundamentally, the Brent has rallied from January lows of USD 27 a barrel to around USD 48 now. Aviation sector has posted good profits due to the low crude oil prices. Currently the crude oil prices have increased, and this has put pressure to some extent on the investors. The aviation sector derives majority of the expenditure i.e. 70 to 80 per cent from fuel expense. The crude oil prices are increasing on the hope of freezing crude oil production by OPEC members since last couple of months. The increment in crude oil prices may impact bottom line of aviation companies in upcoming quarter results.
The Delhi High Court on Thursday directed SpiceJet not to issue or transfer its shares to a third party till the next hearing of Kalanithi Maran's plea on stock warrants. Kalanithi Maran was on board of directors of SpiceJet. The matter has been listed again on May 27, for further hearing by Delhi High Court.
In the last 5 months, the shares of the company have been up by 2 per cent. However, the shares in the past 3 days have fallen by 11 per cent. Technically, the impact of positive results has been discounted in the stocks as the stock has been rallying since the beginning of May 2016. Stock has witnessed profit booking making a bearish engulfing pattern on daily charts, which suggests some more correction before another upside rally.
The shares of SpiceJet have declined by 10.69 per cent on the bourses; and have closed at Rs 71.05 on an intraday basis.
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