Shares of budget carrier SpiceJet Ltd crashed 11.2 per cent to Rs 38.7 per share on the BSE; Here’s why
SpiceJet Share Price: Shares of budget carrier SpiceJet Ltd crashed 11.2 per cent to Rs 38.7 per share on the BSE in the intraday trade on Monday as investors booked profit in the scrip. This came soon after after a report said IndiGo co-founder and former promoter Rakesh Gangwal had no intentions t to buy a stake in the low-cost carrier.
Read More: Stock Market Updates: Sensex Down 150 pts, Nifty Nears 19,700; Delta Corp Drops 8%
The stock has gained 2 per cent since the beginning of this year and has risen 2.40 per cent in a year. However, the stock has surged nearly 30 per cent in the last three months, while it has plunged 48 per cent in the past two years.
The stock hit a 52-week high of Rs 43.82 on October 13, 2023 and fell to a 52-week low of Rs 22.65 on May 23, 2023.
On October 13, SpiceJet shares rallied nearly 18 per cent amid a media report that said the co-founder of airline IndiGo, Rakesh Gangwal, was in advanced stage of talks to acquire a stake in the BSE-listed firm. Gangwal held 5,10,21,132 shares or 13.23 per cent stake in InterGlobe Aviation Ltd at the end of June quarter.
Read More: Avenue Supermart Falls 4% After Q2 Net Profit Slips 9.09% YoY; Should You Buy?
However, a report by The Economic Times over the weekend quoted a banker saying that Gangwal doesn’t have any interest in investing in SpiceJet.
The Gangwal couple own 25 per cent stake in IndiGo. As per the latest company data, Gangwal and his wife Shobha Gangwal held 13.23 per cent (5,10,21,132 shares) and 2.99 per cent stakes, respectively in IndiGo operator InterGlobe Aviation as of June-end, while the family-owned Chinkerpoo Family Trust holds a 13.5 per cent stake.
Read More: Delta Corp Shares Fall Another 10%, Hit 52-Week Low Over Fresh GST Notice
“He still owns 25 per cent in IndiGo. It doesn’t make the remotest sense for him to invest in SpiceJet…Moreover, he sees SpiceJet as a dying airline,” said the banker.
For the June quarter, SpiceJet logged a net profit of Rs 205 crore compared with a loss of Rs 789 crore in the corresponding quarter of last year, due to strong air travel demand. It also registered industry’s highest domestic load factor of 90 per cent in the June quarter.
As per Trendlyne data, the average target price of SpiceJet is Rs 32, which shows a downside of 19% from the current market prices. The consensus recommendation from two analysts for the stock is a ‘Hold’.
