Maintaining a neutral stance on the entire aviation space: Mayuresh Joshi

In a chat with ET Now,Mayuresh Joshi, VP, Institution, Angel Broking, shares his views on aviation space.

ET Now: Will SpiceJet just be a trading play or do you think this change of ownership can materially create wealth for investors over the next 6 to 12 months?

Mayuresh Joshi: Clearly as a disclaimer, we do not cover the stock but if you look at the industry fundamentals,the cuts in ATF prices should aid margin expansion. The fuel purchases made by many airlines companies during the first half should come down with ATF prices cut by 11%.

If one looks at the macro picture, cash flow is not strong for the entire sector including SpiceJet, Jet Airways and many other airlines. Companies are operating in a negative net worth environment and the regulatory concerns in terms of costs both in terms of parking fees, parking base, the infrastructure cost will be sorted out but they will come in the next couple of years.

Though margin expansion is evident probably in Q3-Q4 if crude stays this way, the probable impact on a long term basis is as very well drawn out. The cash flows improvement would be based on a lot of multitude factors and macro development as well and improvement in macro factors as well. So with all these factors probably, we are still maintaining a neutral stance on the entire aviation space.