Shares of SpiceJet have risen almost 13% during the last one month after the company announced plans to raise Rs 2,250 crore through the preferential issue of shares and warrants. However, after the shareholder’s approval, the company’s shares fell 6.3% from the 52-week high of Rs 69.20. During the intraday, the stock fell 0.5% to Rs 65.10.
The stock of SpiceJet rose above 119% in the past six months and has risen nearly 74% in the last one year.
On December 12, the company said in an exchange filing that it would raise fresh capital through the issue of equity shares and convertible securities on a preferential basis. Further, the company said “A part of the above proceeds will be used in maintenance of its grounded fleet for getting these aircrafts return to service which will lead to additional revenue” as they continue to weigh on its revenue.
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Raising equity could revitalize the business, said Rajarshi Maitra, associate director at InCred Research Services.
“We believe that equity raising is imperative and could revitalize the company’s business by way of commencing operations of its entire fleet (currently, 32% of the seats are grounded),” Maitra iterated. “We have factored in that SpiceJet’s entire fleet will be operational in FY26F and hence, ownership plus maintenance costs per available seat kilometer are set to decline to Rs1.68 (22% above the FY19 level).”
We feel the company will retain the benefits of lower cost of available seat kilometer aided by scale-up of ops, Maitra said.
On the industry front, Maitra believes that ticket pricing will be competitive over FY24F-26F as the operations of Air India are more competitive now than earlier.