Stock To Reduce: The share of budget airline SpiceJet Limited (SpiceJet share price) is in focus on Thursday. The company’s share rose 3 percent to Rs 64 during early trade.
Here, experts are alert about this stock and are advising to reduce it from the portfolio. Let us tell you that HSBC has recommended a cut on SpiceJet Limited and has set a target price of Rs 26.
That is, there is a possibility of a decline of up to 60 % in this stock.
What Did Brokerage Say?
An analyst says that given the absence of the airline, the company can use Rs 23,000 crore received from its QIP for losses and working capital.
However, capacity growth and profitability are not the focus at the moment. With heavy debt and just a 3 percent market share, the analyst believes that SpiceJet’s valuation is very expensive.
The main issue is whether the business can revive its operations from a point of decline.
This airline, which is facing a cash crunch, has been in the headlines for some time. This week, the airline watchdog Directorate General of Civil Aviation (DGCA) decided to place the airline that was in trouble under more surveillance.
DGCA stated that it carried out an audit special to the facilities for engineering of the airline on August 7, and 8, and there were some issues discovered in the audit.
Let us inform you that in the quarter ending June, the net profit of the company decreased by 20 % to around 158 crore rupees. While in the same period of the prior financial year, it was 198 crore rupees.
The Share Of The Company
SpiceJet Limited’s share has increased by over 20 % over the past month. The stock has climbed up to 90% in a year however, it has declined by 55% in five years.
The 52-week highest cost of the company’s share is Rs 77.50 and the low price for the 52-week is 33.42 rupees. The market value of the airline company is 4,962.91 crore rupees.
Quick Fact
SpiceJet
| Company name | SpiceJet |
|---|---|
| Focus Stock | SpiceJet |
| Share Movement | Rose by 3% to ₹64 during early trade on Thursday |
| Expert Advice | Reduce from portfolio |
| Recommendation | HSBC recommends cut |
| Possible Target Price | ₹26 |
| Possible Decline | Up to 60% |
| Market Share | 3% |
| Financial Issue | Heavy debt and cash crunch |
| Market Value | ₹4,962.91 crore |
| Surveillance | DGCA placed under more surveillance |
| Profit Decline | Net profit decreased by 20% to ₹158 crore in June quarter |
| Previous Profit | ₹198 crore in the same period last financial year |
| Capacity and Profit Focus | Not the focus currently |
| 1-Year Stock Increase | Climbed up to 90% |
| 5-Year Stock Decline | Declined by 55% |
| Audit Findings | Issues found in August audit by DGCA on engineering facilities |
| Use of Funds | ₹23,000 crore from QIP for losses and working capital |
| Valuation Comment | HSBC considers valuation very expensive |
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