In the past one year, the share price of Spicejet sky rocketed 339 per cent to Rs 68.85 on November 23. (Photo: PTI)

For years the Indian aviation sector experienced turbulent times. The stocks of the aviation companies also went through a rough patch. In the past four years till November 24, 2014, shares of Jet Airways and SpiceJet slid 71.45 per cent and 81.52 per cent, respectively. The benchmark index BSE Sensex jumped 46 per cent during the same period.

However, with the sharp drop in Jet Fuel or Aviation Turbine Fuel prices, the aviation sector staged a smart recovery with shares of Spicejet soaring over 300 per cent in a year. Shares of SpiceJet hit their new 52-week high of Rs 72.50 on Tuesday.

In the past one year, the share price of Spicejet sky rocketed 339 per cent to Rs 68.85 on November 23 this year. The scrip was at Rs 15.68 on November 24 last year. Share price of its competitor Jet Airways climbed 84.6 per cent during the same period. Recently, listed Interglobe Aviation shares also gained nearly 20 per cent in the past eight trading session. Interglobe Aviation listed on bourses on November 10 this year. 

Kunj Bansal, executive director and chief investment officer, Centrum Wealth, said, “The biggest boost has come in the form of a steep drop in Jet Fuel or Aviation Turbine Fuel (ATF) prices. Fuel prices have declined by about 40 per cent since the last quarter of 2014. According to industry data, this could bring down the cost for an Indian Carrier to 30-35 per cent from 45 per cent reported last year.”

India has the fastest growing domestic aviation market in the world, ahead of China and the US. According to the International Air Travel Association (IATA), the number of air passengers rose almost 20 per cent in the eight months ended August 31, 2015 compared with the same period a year ago. According to a report commissioned by Vistara Airlines and conducted by the Centre for Asia Pacific Aviation (CAPA), the number of air travellers in the country is slated to rise to 218 million by 2025 from 70 million in 2015. Aviation could contribute 5 per cent to the country’s GDP or $250 billion by 2025.

The SpiceJet makeover earlier this year also came as a breath of fresh air for the industry. Ever since the Kingfisher debacle, D-Street distanced itself from the aviation stocks. SpiceJet was also on way to similar downfall with mounting debt, cancelled flights, unpaid salaries, quarterly losses and no capital infusion. But in Q4FY2015, Ajay Singh, one of the airline’s founder members took over its reins and things started looking up. With recapitalisation, the company settled outstanding dues, renegotiated contracts, optimised aircraft utilisation and revenue maximisation. The stock is up a whopping 281 per cent on a year to date basis.

For the quarter ended September 2015, SpiceJet reported a net profit of Rs 23.77 crore on the back of a steep fall in fuel costs and other expenses. It had a net loss of Rs 310.45 crore in the year-ago period. However, SpiceJet’s total income from operations declined over 28 per cent to Rs 1,040.13 crore in July-September of the current fiscal.

Jet Airways reported net profit of Rs 87.59 crore for the last quarter ended September 30, 2015. The company reported net profit of Rs 69.82 in the same quarter last year.

For the year, ended March 2015, Spice Jet posted net loss of Rs 748.41 crore against net loss of Rs 1003.24 crore last year. In the financial year ended March 2012 and 2013, SpiceJet posted net loss of Rs 605.77 crore and Rs 191.08 crore, respectively. However, in FY 2010-11, it reported net profit of Rs 103.43 crore.

Jet Airways reported a consolidated net loss of Rs 2101.36 crore for the year ended March 2015 against net loss of Rs 4128 crore last year.

For the financial year ended March 2015, InterGlobe Aviation reported net profit of Rs 1,295.58, up 173 per cent, against Rs 474.44 crore in the previous financial year. The company registered net profit of Rs 987.3 crore in the financial year ended March 2013.

SpiceJet is reportedly planning to buy at least 150 new planes. The company is in talks with aircraft manufacturers to place orders for 100 narrow-bodied aircraft (Boeing 737 MAX or Airbus 320 Neo) and 50 turboprop aircraft. The company is buying large aircraft for metros and larger towns, while small aircraft for smaller regional towns. Currently, the company operates a fleet of 25 Boeing, two Airbus (on wet lease) and 14 Bombardier aircraft.

As part of its expansion plan, the low cost airline in November has launched direct flight service to Dubai from Amritsar.

In terms of On-Time Performance (OTP), SpiceJet remained on the second spot (86.9 per cent) after IndiGo (89.6 per cent) in October. The OTP numbers have been computed on the basis of four metro airports – Bengaluru, Delhi, Hyderabad and Mumbai, according to agencies.

According to Bansal, Indian airlines seem to be in a sweet spot currently. With fuel prices at an all-time low, the government pushing for over 50 per cent FDI in domestic carriers, air traffic showing strong growth and a number of fresh issuances in the aviation sector, domestic carriers look well placed in the short term. However, other overhangs continue to weigh on the Indian aviation sector. These are – higher government taxes/duties, high airport charges, MRO or Maintenance, Repair and Overhaul costs that are payable in dollars, which are continuously appreciating and of course, a competitive market.

Edelweiss in a research report in October said, SpiceJet has managed to discharge a significant portion of its liabilities and pare payables from Rs 1800 crore to Rs 1100 crore. Management is confident of a robust Q3, given the initial pre-booking trend ahead of the peak festive season. With the airline returning to normalcy, management has now shifted focus to growth.”

The stock soared 8.63 per cent to Rs 2,648 on BSE. On NSE, shares jumped 8.29 per cent to Rs 2,645.

Shares of Pfizer rose sharply by nearly 9 per cent on Tuesday after its parent Pfizer Inc’s announcement to buy Botox manufacturer Allergan in a record $160 billion deal, a biggest buyout in the global healthcare sector.

The stock soared 8.63 per cent to Rs 2,648 on BSE. On NSE, shares jumped 8.29 per cent to Rs 2,645.

The deal will technically see Dublin-based Allergan buying its much larger partner. It will allow New York-based Pfizer to shift base to Ireland for tax purposes.
Allergan shareholders will receive 11.3 shares in the combined company for each share held.
Pfizer investors will be able to opt for cash instead of stock in the combined company in exchange for their shares, provided the aggregate amount of cash to be paid is not less than $6 billion or more than $12 billion.

As per the definitive merger agreement that has been approved by the Boards of the two companies, Pfizer will combine with Allergan in a stock transaction currently valued at $363.63 per Allergan share, for a total enterprise value of approximately $160 billion, Pfizer said in a statement yesterday.

Shares of Lanco Infratech breached their upper circuit in the early trade on Monday after the company on Monday announced that its subsidiary Lanco Solar Private Limited signed a landmark agreement with Chhattisgarh Government to bring Chhattisgarh on the global silicon map.

Shares of Lanco Infratech breached their upper circuit in the early trade on Monday after the company on Monday announced that its subsidiary Lanco Solar Private Limited signed a landmark agreement with Chhattisgarh Government to bring Chhattisgarh on the global silicon map. As per the MOU inked with the Chhattisgarh Government, Lanco Solar will set up 100 MW solar cell manufacturing plant.

The share price of the company soared 19.89 per cent to Rs 6.39 per cent in the early trade. Shares of Lanco Infratech closed at Rs 5.33 on Monday.

For the integrated solar PV manufacturing project which re-started in July 2015, Lanco Infratech has already done an investment of Rs 1,200 crore to manufacture Poly-Silicon Refining and Wafer Plant and 150 MW module plant. The Project is being set up at a 250 acre SEZ location in Rajnandgaon, Chhattisgarh under the National Solar Mission objective of achieving domestic PV cell production of 2200 MW/year and the Make in India Programme of the Government of India. The salient feature of the project is that it has already approved and committed water and power availability and all clearances for land and its usage.

The share price of the company has touched a 52 week high of Rs 7.24 on Feb 28, 2015 and a 52 week low of Rs 2.46 on Aug 25, 2015.

In the past one year, the share price of the company plunged 20.56 per cent to Rs 5.33 on November 23. The share price of the copmany was at Rs 6.71 on November 24 last year. Sensex declined 9 per cent during the same period.

The company on Monday also posted a consolidated net profit of Rs 98.98 crore in the second quarter of the current fiscal after three years, due to tax reimbursements and favourable power tariff order.

The firm posted a loss of Rs 527.48 crore in the same period last year, Lanco Infratech Ltd (LITL) said in BSE filing.

According to the statement, the company earned profits on the consolidated basis after a gap of three years.

Lanco Infratech is the leading integrated infrastructure conglomerate with global footprints having business verticals viz. EPC, Power, Solar, Natural Resources and Infrastructure.

Petronet LNG socks will be in focus as RasGas of Qatar has agreed to not to press for the $1 billion in penalty that Petronet LNG Ltd, India’s biggest import of liquefied natural gas (LNG), has to pay for buying only 68 per cent of the contracted 7.5 million tons this year.

The BSE Sensex and NSE Nifty opened in negative zone on Tuesday following weak global cues. At 9.35 am, Sensex was down 0.45 points at 25,818.89. Similarly, Nifty was down 2.50 points at 7,846.75 during the same time.

JSW Steel: Credit ratings agency Fitch on Monday downgraded its outlook on JSW Steel to ‘Negative’ from ‘Stable’ due to risk of further decline in product prices.

Nestle India: Stocks of the company will be in focus as it has resumed production of Maggi noodles from its fourth plant at Pantnagar in Uttarakhand.

Petronet LNG: Stocks of the company will be in focus as RasGas of Qatar has agreed to not to press for the USD 1 billion in penalty that Petronet LNG Ltd, India’s biggest import of liquefied natural gas (LNG), has to pay for buying only 68 per cent of the contracted 7.5 million tons this year.

Tata Motors: Tata Motors’ Jaguar Land Rover (JLR) will post a lower pre-tax profit in 2015 than in the previous fiscal year, its CEO told Reuters, due to major investments and a blast at China’s Tianjin port that destroyed thousands of its cars.

Maruti Suzuki: Asserting that it will have full control over upcoming plant in Gujarat despite letting parent Suzuki own and invest there, Maruti Suzuki India has hit back at proxy advisory firm IiAS, which asked minority shareholders to vote against the move, saying the “conclusions” are not based on “any facts or logic”.

Pfizer: Pfizer Inc on Monday said it would buy Botox maker Allergan Plc in a deal worth $160 billion to slash its US tax bill, rekindling a fierce political debate over the financial maneuver. The acquisition, which would create the world’s largest drugmaker and shift Pfizer’s headquarters to Ireland.

Lanco Infratech: Lanco Infratech on Monday announced that its subsidiary Lanco Solar Private Limited signed a landmark agreement with Chhattisgarh Government to bring Chhattisgarh on the global silicon map. As per the MOU inked on Monday with the Chhattisgarh Government, Lanco Solar will set up 100 MW solar cell manufacturing plant.

IDBI Bank:  The bank on Monday launched an issue of US dollar-denominated green bonds through its Dubai branch. The bank will utilise the proceeds to fund new and existing green projects.

Tata Steel: According to media reports, Tata Steel is likely to raise $1.5 bln to refinance debt.

Wockhardt: Drug regulator National Pharmaceutical Pricing Authority has exempted Wockhardt’s three insulin products from price controls for a period of five years with effect from January 8 this year.

ONGC: More than a year after it sacked three UPA-appointed independent directors on ONGC board, the government has appointed ex-IFS Ajai Malhotra and two others as non-oficial part-time directors on the board of the nation’s biggest oil and gas producer.

Gammon India: The company on Monday informed BSE that the Corporate Debt Restructuring Empowered Group-(CDR EG) in its meeting held on Nov 23 discussed and noted the invocation of Strategic Debt Restructuring (SDR) in the Company by the CDR Lenders, pursuant to RBI Circular dated June 08, 2015.

UPL and Advanta: UPL, formerly known as United Phosphorus, has received its board’s approval to merge its agriculture seed company Advanta with itself in a bid to improve shareholder value and simply the group structure. The merger is backdated to 1 April 2015.  The merger will result in access to newer territories, enhanced coverage in existing markets, leveraging channel capabilities. The company expects to achieve annual cost savings of Rs 90 crore as well.

Maintain ‘neutral’ on Bharat Forge  with a target price of Rs 852 per share despite the correction in the stock price. We value the stock on a P/E basis and attribute the ~17x target multiple to the average FY17-18f EPS of Rs 50 to arrive at target. Currently, risks to exports (60% of revenue in FY15) balance out potential upside in the domestic non-auto segments, in our view.

Volvo recently commented on its October truck deliveries that “Production in North America will be adjusted as a consequence of lower demand and high inventories in the distribution channel”. We believe this raises red flags suggesting industry demand will be weak in 2016. We had been highlighting that while the current North America order book remains quite strong (~5x production levels), a slowdown in order inflows could pose a risk to industry production levels in 2016.

Previously, October 2015 order inflows for class-8 trucks in North America (preliminary data as per Freight Transportation Research) fell sharply by 45% y-o-y to 25,010. While this is the eighth consecutive month of decline (order inflows fell by ~24% y-o-y over the March-Oct 2015 period), 45% decline in October is the highest seen during the period.