Price war likely in aviation sector; InterGlobe valuations look cheap: Deepak Shenoy

In a chat with ET Now, Deepak Shenoy, Founder, Capital Mind, shares his view on the newly-listed stock of InterGlobe Aviation.

ET Now: While Eros International Media is looking like a falling knife, InterGlobe is moving completely the other way around. It is riding against the tide. At Rs 1,000, with the expectations of earnings per share ( EPS) rising to Rs 80 for FY16, how is the stock looking?

Deepak Shenoy: It is still cheap because I think if you look at the stock from the perspective of EPS of Rs 80, it is still ruling at a P/E of 12 times. It is cheap compared to the rest. The fact that if Indian aviation companies were to grow - which they have not yet and I have my doubts on it growing substantially - then InterGlobe would be a cheap stock, given it is the biggest player in that sector.

Having said that I believe the recent fall in crude prices has contributed substantially to margins. I hope that does not change. In the next two years, I do not see any serious headwinds. Even if there are headwinds for the airlines industry, they will be in the form of a price war and I do expect that in the near term. That said, I believe that InterGlobe will still emerge as a profitable company.