Jet shares crash a record 32% to hit decade low
MUMBAI: Shares of Jet Airways plunged a record 32% to its lowest in a decade as the carrier suspended operations after failing to secure emergency funds from lenders. Rivals enjoyed a brief spurt — SpiceJet surged to a 52-week high and InterGlobe Aviation, which runs IndiGoNSE -1.74 %, hit an all-time record. But those gains fizzled later in the session as SpiceJet ended 2.7% up and InterGlobe fell 2% at the close.
Some experts see Jet Airways, which was once India’s largest private airline, sliding even lower if lenders are unable to get the carrier’s planes back in the air again. The stock closed at Rs 163.90 on Thursday, its lowest since March 25, 2009, having suffered its worst single-day decline since it began trading in 2005.
“Jet’s stock may fall further given that expressions of interest will come by May 10,” said Gautam Shroff, co-head of institutional equities at Edelweiss. “Some braveheart traders may be willing to take positions in Jet in the hope of a revival but I don’t think investors should do that.” Shortlisted bidders for Jet are to make binding submissions by May 10.
Shares of Jet Airways fell as much as 34.6% to a low of Rs 158.10 during the session.
Jet Airways CEO Vinay Dube had appealed to lenders for emergency funding of Rs 400 crore but they refused to do so without additional collateral, grounding the airline on Wednesday night.
SpiceJet ended at Rs 136.25 after gaining as much as 15% during the session to a one-year high of Rs 152.60. InterGlobe Aviation ended at Rs 1,554.70, having touched a lifetime high of Rs 1,650 during trade.
However, SpiceJet and InterGlobe have gained 74.5% and 17.6%, respectively, in the past month. Still, analysts say there are no significant gains to be made in the two as they have already risen significantly and oil prices remain a headwind. They could even give up some of their advances if solutions start emerging to the Jet crisis, analysts said.
“Both SpiceJet and IndiGo may see supernormal profits as Jet has stopped operations but the rally in these stocks may not last too long as these stocks have gained sharply,” said independent market expert Ambareesh Baliga. Investors should keep away from Jet’s shares as the “survival premium” to be paid is too high, he said.
Shroff of Edelweiss said it would be a risky trade to buy airline stocks in the face of the crude oil price risk. “It would be better to wait and watch for another quarter,” he said.
Jet reported a loss of Rs 3,208 crore in the first-nine months of the last financial year. InterGlobe Aviation and SpiceJet reported losses of Rs 433.50 crore and Rs 372.40 crore, respectively, in the same period.
“Other airlines have a free runway for now with landing rights, parking etc. But investors shouldn’t do any bottom fishing in Jet,” said Abhimanyu Sofat, head of research at IIFL.
Jet’s stock, despite its financial woes, had been resilient until Monday as investors held on to hope of a rescue. The stock, which was down 5.7% year-to-date on Monday, is now down 41% for 2019.
Sofat believes that Indigo may benefit more from Jet’s shutdown as it has seen addition in capacity for the last few quarters butt Spice-Jet may not be able to take as much advantage as its capacity has not increased as much as.
Jet’s fate will depend on the binding bids that are submitted next month. The four shortlisted bidders include TPG Capital and Indigo Partners, Indian wealth fund National Investment and Infrastructure Fund and Etihad Airways, which owns 24% of Jet.