SpiceJet - 1QFY2013 Result Update - Angel Broking

Strong top-line growth continue, margins turn positive: For 1QFY2013, SpiceJet reported strong top-line growth of 55.1% yoy on the back of capacity additions during the year, higher load factor coupled with higher ticket prices on a yoy basis. EBITDAR margin increased by 1,168bp yoy to positive 18.6% and EBITDA margin increased by 1,225bp yoy to positive 5.2%, owing to higher load factor and ticket prices during the quarter. Company's load factor improved to 80.3% during the quarter on an expanded fleet size compared to 78.9% in 1QFY2012. Passenger yields also increased by 24% yoy to Rs.4,068 v/s. Rs.3,283 in 1QFY2012. Consequently, SpiceJet registered profit of Rs.56cr in 1QFY2013 compared to loss of Rs.72cr in 1QFY2012.

Profits sustainable over FY2013-14: We believe the industry is witnessing a structural change, where airline companies have increased their ticket prices and competition has reduced to a certain extent. Load factors have also been improving for all airlines post Kingfisher's capacity reduction. We expect SpiceJet to witness high load factor going ahead and report full year profit in FY13-14E. With the company's expected fuel import to start from July 2012, we expect its profit margin to further improve from 2QFY2013. SpiceJet currently has a fleet of 35 Boeing aircraft and 12 Bombardier aircraft. The company will also add seven Boeing and three Bombardier aircraft by the end of FY2014. By the end of FY2014, the total tally would be 42 Boeings and 15 Bombardiers, as per the current expansion plans. We expect the company's net sales to post a 28.5% CAGR to Rs.6,599cr over FY2012-14 and report PAT of Rs.175 and Rs.260 in FY2013 and FY2014 respectively. We recommend Buy on the stock with a target price of Rs.43.

Source : Equity Bulls

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