CLSA cuts target price on Jet Airways by 21% to Rs 300
As Jet Airways has substantial debt in US dollar terms, a rising interest rate environment there is an added negative, said CLSA.
By ET Bureau | Updated:
MUMBAI: Foreign brokerage CLSA slashed its target price on Jet Airways (India) by 21% to Rs 300 after the low-cost carrier's poor performance in December quarter, citing weaker revenue growth outlook and cost disadvantage over peers. Jet shares fell 1.2% to close at Rs 380.85 on Friday before third quarter results announcement.
After market hours on Friday, Jet Airways, which is the second biggest airline by market airline by market share in India, posted a 69% fall in standalone net profit from a year ago to Rs 142.4 crore. Revenue fell 7.3% to Rs 3,344.6 crore in the quarter. The earnings fell short of estimates due to weak yields and rising fuel costs.
Maintaining a 'sell' rating on Jet Airways, CLSA said it does not have strong revenue advantage for offering a full-service product. As Jet Airways has substantial debt in US dollar terms, a rising interest rate environment there is an added negative, said CLSA.
The brokerage has cut estimates for FY17 (2016-17, April-March) to FY19 (2018-19) by 23-36% to factor in the weaker revenue performance.
The stock has underperformed peers -InterGlobe Aviation and SpiceJet -in the last three months and one year. In the last three months, Jet Airways has declined 16.5%, while InterGlobe Aviation and SpiceJet have fallen 7% and 8%, respectively.
After market hours on Friday, Jet Airways, which is the second biggest airline by market airline by market share in India, posted a 69% fall in standalone net profit from a year ago to Rs 142.4 crore. Revenue fell 7.3% to Rs 3,344.6 crore in the quarter. The earnings fell short of estimates due to weak yields and rising fuel costs.
Maintaining a 'sell' rating on Jet Airways, CLSA said it does not have strong revenue advantage for offering a full-service product. As Jet Airways has substantial debt in US dollar terms, a rising interest rate environment there is an added negative, said CLSA.
The brokerage has cut estimates for FY17 (2016-17, April-March) to FY19 (2018-19) by 23-36% to factor in the weaker revenue performance.
The stock has underperformed peers -InterGlobe Aviation and SpiceJet -in the last three months and one year. In the last three months, Jet Airways has declined 16.5%, while InterGlobe Aviation and SpiceJet have fallen 7% and 8%, respectively.
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