SpiceJet Limited - Something to hope for - 1QFY14 Results Review - Antique

Revenue for 1QFY14 increased by 16.2% YoY (QoQ increase of 17.1%) to INR17.0bn mainly on account of 13% YoY growth in no of passenger to 3.68m. International business has now contributed 11% of revenue. The average revenue per passenger increased by 7.2% to from INR4,320 in 1QFY13 to INR4,632 in 1QFY14. The revenue was 12% higher than our estimates of INR15.25bn due to better than expected realization.

Valuations

The company has very high sensitivity with fuel cost as it currently accounts for ~45% of sales. We expect revenue of INR65.15bn and PAT of INR991m in FY14e and revenue of INR73bn and PAT of INR1.7bn in FY15. We maintain our target price of INR51 based on average of 6.5xEV/EBITDAR and 1.3xSales. We believe with FDI policy, valuations will be driven by long term business opportunity for the sector considering the low penetration of aviation market in India. The increasing market and relative strong balance sheet should re-rate the valuation for the company. We maintain BUY.

Source : Equity Bulls

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