Jet Airways - Lifeline offered - Kotak

Etihad is set to buy 24% (fully diluted) stake in Jet Airways via issue of 27.2 mn preferential shares at a price of Rs754 per share, which would lead to infusion of Rs20.5 bn into the airline. Also, it would buy 50% stake in the company which manages the 'Jet Privilege' program for US$150 mn. Lastly, it would give letter of comfort to banks for US$150 mn of lending facility for Jet. The deal has been sweetened (for Etihad) through a four-fold increase in bilateral flying rights between India and Abu Dhabi, which would allow it to emerge as a regional hub.

In case the deal goes through, our target price would increase to Rs550. We recommend investors to sell.

Source : Equity Bulls

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