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SpiceJet 3QFY2012 performance highlights and results update

Contributed by Angel Broking

For 3QFY2012, SpiceJet’s net sales grew by 41.6% yoy to Rs.1,176cr. EBITDA margin came in at negative 1.6%. At the EBITDA level, the company witnessed loss of Rs.19cr. Consequently, the company reported net loss of Rs.39cr during the quarter. We remain Neutral on the stock.

Strong top-line growth, while margin declines: For 3QFY2012, SpiceJet reported strong top-line growth of 41.6% yoy on the back of capacity additions during the year. EBITDAR margin declined by 1,451bp yoy to 12.0% and EBITDA margin declined by 1,536bp yoy to negative 1.6%, owing to higher fuel cost during the quarter. The company could not raise ticket prices as much as fuel cost due to stiff completion from FCC players, who were reducing prices to increase load factors and gain market share. The company registered loss of Rs.39cr in 3QFY2012 compared to profit of Rs.94cr in 3QFY2011.

Outlook and valuation: SpiceJet currently has a fleet of 32 Boeing aircraft and seven Bombardier aircraft. The company will also add four Bombardier aircraft by the end of FY2012. In FY2013, the company will further add five Boeing aircraft and four Bombardiers. By the end of FY2013, the total tally would be 37 Boeings and 15 Bombardiers, as per the current expansion plans. We expect the company’s net sales to post a 35.4% CAGR to Rs.5,384cr over FY2011–13. Owing to higher ATF prices and intense competition, we have a cautious view on the sector and, thus, remain Neutral on the stock.