Aviation stocks surge on the back of Tata-Air India deal; IndiGo jumps 9%, SpiceJet up 4.5% - check the reason

As the aviation sector is likely to head for re-rating and revaluation, as analysts predict after the Tatas winning the bid of Air India, the shares of airline companies — InterGlobe Aviation (IndiGo) and Spice Jet — was surging during Monday’s intraday trade on the exchanges.

IndiGo shares gained around 9 per cent to Rs 2135.2 per share, while SpiceJet, one of the bidders for the Air India takeover, surged almost 4.5 per cent to 77.6 per share on the BSE intraday trade today. 

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TradeSwift’s Director and market expert Sandeep Jain said that the Tatas taking over of Air India eventually increases the confidence within the overall sector and believes the sector would soon go for re-rating and re-valuation.   

He believes, the government going forward to come up with a lot more developmental initiatives for the aviation sector with Tatas buying the Air India. 

On Friday, the government announced that Tata Sons emerged as the winning bidder for Air India. The announcement was made by the secretaries of DIPAM and the ministry of civil aviation with further mentioning that the transaction is expected to close by December 2021.

The shares of IndiGo are trading over 5 per cent higher to Rs 2061 per share; and that of SpiceJet are up 2.5 per cent at around 02:52 pm on the BSE, as compared to a 0.43 per cent rise in the BSE Sensex.

Similarly, Dolat Capital Head of Research Amit Khurana mentioned that Tatas overtaking Air India is good for the aviation sector, because it now has a new player now with deep pockets and good branding. He added, India is the only aviation market, which is actually growing in leaps and turns and this development will bring a lot of growth and opportunities for the overall aviation sector. 

So far in the aviation sector, there are three prominent players — IndiGo, SpiceJet, and Go Air. The first two are listed entities, while the third one has filed a request with the market regulator Securities and Exchanges Board of India for the initial public offer (IPO).