Jet Airways flies nearly 20% post Etihad deal, hits 52-week high

NEW DELHI: Jet Airways Ltd surged nearly 20 per cent to hit its 52-week high of Rs 688.60 in morning trade on Thursday, a day after the airliner inked a deal to sell 24 per cent stake to Abu Dhabi-based Etihad Airways.

At 09:25 am, Jet Airways Ltd pared some of its gains and was trading 16 per cent higher at Rs 667.45. It hit a low of Rs 660.35 and a high of Rs 688.60 in trade today.

As per the deal, Jet Airways will sell 27.3 million shares to Etihad Airways at Rs 754.75 per share through preferential allotment.

According to analysts, reports of deal value of Rs 700 per share have been making rounds for some time. It is a positive development for the debt-ridden airline.

The deal would give Etihad a bigger platform in India, and provide Jet Airways with much needed cash to retire its debt, say experts.

There are two ways for Jet to utilise the funds. It can marginally lighten the balance sheet by reducing its mammoth debt of around Rs 13,000 crore. It may also use some of the money to expand operations overseas, especially in Abu Dhabi, ET said in a report.

"The deal is very big positive for the whole aviation industry and especially for Jet because they can significantly reduce their debt and have a good partnership going ahead for a long term," said Sharan Lillaney, Aviation Analyst, Angel Broking in an interview with ET Now.

"The deal is basically a part mix of promoter as well as company issuing shares to equal Etihad having 24 per cent stake in the company. We expect the stock to head higher from here," he added.

The stock has given a smart pullback rally of almost 24 per cent in a time span of just eight days. Now the stock is expected to get a stiff resistance near Rs 600 levels.

Long-term investors are better off hanging on to the stock of Jet Airways as the company's more profitable international business will receive a major boost due to the synergies involved in Etihad Airways.

Technical View: Ranajit Kumar Saha, Sr. Manager at Microsec Capital Ltd

If Jet Airways is able to maintain above this level of Rs 600, an upward rally might carry it to Rs 645 and then Rs 690 in the short term.