CLSA Cuts Target Price on Jet Air by 21% to 300
Mumbai: Foreign brokerage CLSA slashed its target price on Jet Airways (India) by 21% to ₹ 300 after the low-cost carrier’s poor performance in December quarter, citing weaker revenue growth outlook and cost disadvantage over peers. Jet shares fell 1.2% to close at ₹ 380.85 on Friday before third quarter results announcement.
After market hours on Friday, Jet Airways, which is the second biggest a i rl i ne by market share in India, posted a 69% fall in standalone net profit from a year ago to ₹ 142.4 crore. Revenue fell 7.3% to ₹ 3,344.6 crore in the quarter. The earnings fell short of estimates due to weak yields and rising fuel costs.
Maintaining a ‘sell’ rating on Jet Airways, CLSA said it does not have strong revenue advantage for offering a full-service product. As Jet Airways has substantial debt in US dollar terms, a rising interest rate environment there is an added negative, said CLSA.
The brokerage has cut estimates for FY17 (2016-17, April-March) to FY19 (2018-19) by 23-36% to factor in the weaker revenue performance. The stock has underperformed peers — InterGlobe Aviation and SpiceJet — in the last three months and one year. In the last three months, Jet Airways has declined 16.5%, while InterGlobe Aviation and SpiceJet have fallen 7% and 8%, respectively.
CLSA has cut estimates for FY17 to FY19 by 23-36% to factor in the weaker revenue performance