Wednesday, July 11, 2018

Ideas for profit: IndiGo, SpiceJet set to soar

Despite facing high levels of competition, India’s aviation industry is in a sweet spot thanks to a favourable operating environment led by increase in passenger traffic, improving utilisation and government’s accommodative policy. Though rising air turbine fuel (ATF) prices are posing a lot of challenges to the airline carriers, players having an excellent geographic coverage, cost management and performance, along with sound financials health are well placed.
Recent weakness in the stock prices of Indian airlines on the back overall market volatility and rising ATF prices is providing an opportunity to board fundamentally strong business for the long term. We prefer IndiGo and SpiceJet from this space.
In the last 4 years, domestic traffic registered a 20 percent compounded growth, gaining market from railways. The government’s regional air connectivity scheme – UDAN - is another avenue for airline carriers to capture growth originating from non-trunk routes. It has already cleared many routes under this scheme.
10/07/18 Nitin Agarwal/moneycontrol
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