SpiceJet, IndiGo, Jet Airways stocks gain up to 9% as government raises loan limit

Aviation stocks -- SpiceJet, IndiGo and Jet Airways, gained up to 9 per cent on Thursday after the government raised loan limit to Rs 1,500 crore for the aviation sector to tide over stress. SpiceJet's share price gained most by 9 per cent to Rs 42 apiece on the NSE while Jet Airways jumped over 4 per cent to Rs 99.6. Likewise, Interglobe Aviation or IndiGo share price zoomed 1 per cent to Rs 1875.55. However, it surrendered the gains to trade in negative territory.

Earlier on Wednesday, the Finance Ministry modified the Emergency Credit Line Guarantee Scheme (ECLGS) by raising the loan limit under the scheme to Rs 1,500 crore from Rs 400 crore to help the COVID-hit industry tide over liquidity stress.

According to an official statement, “The Department of Financial Services (DFS) has modified the ECLGS on Tuesday to enhance the maximum loan amount eligibility for airlines, recognising that an efficient and strong civil aviation sector is vital for the economic development of the country.”

Ajay Singh, Chairman and Managing Director, SpiceJet thanked the government for enhancing the ECLGS limit and said, “The speed and urgency with which the Aviation and Finance Ministries have been taking up issues and problems being faced by airlines post-Covid and due to the record high oil prices is nothing but remarkable.”

Credit Suisse gave an Outperform rating to IndiGo with a target price of Rs 2,350 and said, “Peaking of crude and currency risks may let other merits surface. Positive takeaway on consumer price sensitivity, as traffic sustained in face of higher prices.”

The rupee has depreciated by 3 per cent sequentially against the USD in Q2FY23 to Rs81.4/USD, which should drive a steep fx MTM loss of Rs 10.9 bn for IndiGo, Centrum Broking said while maintaining a Buy stance. It expects EBITDAR of Rs 5.6 bn and a net loss of Rs 12.9 bn in Q2FY23 on a reported basis.