SpiceJet - De-risking initiatives bearing fruit; best placed to attract FDI - Motilal Oswal

Industry outlook positive; fares up ~20% YTD

We met the management of SpiceJet (SJET), India's second largest low cost carrier (LCC), having a market share of ~18.5%. Our key takeaways:

- Outlook for the Indian Aviation industry is positive, given (1) sharp moderation in industry capacity, (2) rational pricing by key players, and (3) recent regulatory measures.

- SJET's de-risking initiatives are bearing fruit, which is reflected in the 31% drop in net losses in 2QFY13. SJET is poised for a turnaround by FY14.

- Given SJET's industry positioning and strong balance sheet, it would be a prime target for any international airlines looking to gain a strategic foothold in India, one of the fastest growing aviation markets in the world.

- SJET trades at an EV of 15x/ 8.5x its consensus FY13E/FY14E EBITDAR. Not Rated.

Source : Equity Bulls

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