IndiGo, SpiceJet shares fall amid market-wide sell-off; Maharashtra cuts VAT on jet fuel
Aviation stocks: The state government reduced the levy of VAT on jet fuel to 18 per cent from 25 per cent.
Aviation stocks: Aviation stocks traded in red amid a broad-based sell-off on Dalal Street on Friday. InterGlobe Aviation (IndiGo) shares fell around one per cent in early deals, looking better than the overall market, after the Maharashtra government announced a cut in the value-added tax (VAT) applicable to aviation turbine fuel (ATF) – or jet fuel.
The state government reduced the levy of VAT on jet fuel to 18 per cent from 25 per cent.
Fuel forms the lion's share of operating costs for airlines.
Also Read: Maharashtra cuts VAT on aviation fuel in efforts to ramp up air connectivity; Centre hails move
Zee Business Analyst Ashish Chaturvedi has recommended buying IndiGo shares for a target price of Rs 1,915 apiece with a stop loss at Rs 1,856.
Maharashtra government announcement on ATF VAT
During the Maharashtra Budget session on Thursday, Deputy Chief Minister and Finance Minister Devendra Fadnavis announced the reduction in VAT levied on ATF. .
He said the new rate will be applicable in Mumbai, Pune and Raigad districts.
The government has also allocated Rs 100 crore for airport development projects in Maharashtra at Sambhajinagar, Nagpur, Pune, Baramati and Shirdi.
The prices of fuel, including aviation turbine fuel, are generally revised on the first day of every month based on the average rate of international benchmark and foreign exchange rates.
Q3 results: How IndiGo and SpiceJet fared in the quarter ended December 2022
IndiGo reported growth of almost 11 times on a year-on-year basis in profit to Rs 1,422.6 crore for the three-month period ended December 2022 driven by robust travel demand.
SpiceJet reported a 2.7 times increase in net profit to Rs 110.5 crore for the three-month period.
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