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SpiceJet Q1 preview: Higher passenger load, low oil prices to boost numbers

Budget airline SpiceJet is slated to announce its June quarter result for financial year 2019-20 (Q1FY20) on Friday, August 9, amid expectations of robust growth in net profit and earnings before interest, tax, depreciation, amortization and restructuring and rent cost (EBITDAR) margin.

Analysts at Edelweiss Securities, for instance, estimate a net profit of Rs 154 crore, up 506 per cent, from a PAT of Rs 25.4 crore clocked in the same quarter of the previous fiscal (Q1FY19). This would also be a 173.5 per cent rise sequentially, from Rs 56.3 crore logged in March quarter of FY19 (Q4FY19).

Capturing market share of beleaguered Jet Airways, adding new passengers and operating new flights over routes under government’s regional connectivity scheme, UDAN, are some of the factors that will help the airline push its earnings, analysts say.

“Taking advantage from its fleet commonality with Jet Airways, SpiceJet inducted nearly 30 aircrafts during the quarter (largely ex-Jet), taking its overall fleet count to 106. On the back of 3 per cent increase in yield and high load factors (92 per cent), we expect the airline to report strong EBITDAR margins and profitability,” wrote analysts at Prabhudas Lilladher in a result preview note.

They peg EBITDAR margin at 20 per cent, up from 16.3 per cent reported in Q1FY19, but flat as compared to 20.2 per cent reported in Q4FY19.

Edelweiss projects the EBITDAR to come in at Rs 699.7 crore on the back of lower aviation turbine fuel (ATF). The low cost carrier (LCC) had clocked an EBITDAR of Rs 363.4 crore in Q1FY19 and Rs 510.9 crore in Q4FY19.

“Non-fuel cost per available seat-kilometre (CASK), a metric to gauge an airline’s per unit cost, will remain elevated due to significant surge in aircraft capacity during the quarter,” analysts at Edelweiss Securities caution about the airline.

Further, sales are pegged at Rs 2,778.3 crore for the recently concluded quarter, up 24.3 per cent YoY, from Rs 2,235.8 crore seen in June quarter of previous fiscal and Rs 2,531.3 crore reported in Q4FY19.

According to data provided by Directorate General of Civil Aviation (DGCA), the LCC is the second largest airline in India, by market share. The market share grew from 13.6 per cent to 14.5 per cent between quarter ending March, 2019 and quarter ending June, 2019. In the first six months of CY19, the airline has a market share of 14 per cent, coming second to IndiGo.

The passenger count also grew from 48 lakh at the end of March, 2019 to 51.19 lakh at the end of June, 2019. During the same period, SpiceJet’s market share went up from 13.1 per cent to 15.6 per cent between April and June, as against its competitor, IndiGo’s share, which slipped from 49.9 per cent to 48.1 per cent.

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