Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
11,968.40-30.7
Stock Analysis, IPO, Mutual Funds, Bonds & More

Troubles at IndiGo could add tailwinds to SpiceJet’s growth

After Jet Airways was grounded in April, SpiceJet has acquired most of its coveted metro routes.

, ET Bureau|
Jul 11, 2019, 07.50 AM IST
0Comments
BCCL
Spicejet-1---BCCL
In May, SpiceJet’s market share rose to 14.8 per cent from 13.1 per cent a month ago, while that of InterGlobe, the owner of Indigo, fell to 49 per cent from 50 per cent.
ET Intelligence Group: The current spat between the two IndiGo promoters puts SpiceJet in a sweet spot. From being on the verge of bankruptcy five years ago to becoming the country’s second-largest carrier, SpiceJet has shown the fastest growth among peers.

In May, SpiceJet’s market share rose to 14.8 per cent from 13.1 per cent a month ago, while that of InterGlobe, the owner of Indigo, fell to 49 per cent from 50 per cent. The trend is expected to continue. After Jet Airways was grounded in April, SpiceJet has acquired most of its coveted metro routes and its benefit will be visible in the coming months.

The feud between the promoters of Indigo could last longer than expected with both having near equal holding in the company. Rahul Bhatia owns 38 per cent and Rakesh Gangwal owns 37 per cent. In case of SpiceJet, there is only one promoter – Ajay Singh who analysts view as an ambitious and aggressive individual. This along with SpiceJet’s higher estimated growth will prompt the street to give a higher weight to the second-largest carrier and lead to higher valuation multiples.

On Wednesday, InterGlobe Aviation’s stock nosedived by 10.8 per cent, while SpiceJet’s stock rose by 2.6 per cent. At these prices, InterGlobe’s enterprise value was 6.7 times the operating margin before depreciation and amortisation (EBIDTA). For Spice-Jet, it was 4.6 times.
Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service