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Kingfisher Airlines:: Rising yields drive growth...
In Q3FY11, Kingfisher Airlines (KFA) reported consolidated revenues of
|1,658.7 crore (up 28.1% YoY, 20.0% QoQ), which remained more or
less in line with our expectations (I-direct estimate: |1,690.1 crore). The
growth in revenue was mainly driven by strong growth in yield per
ASKM (domestic yields up 16.2% YoY, international yields up 40.7%
YoY) on robust demand despite a decline in the domestic market share
led by a reduction in the total number of flights. It declined 5.8% YoY to
30,883 (domestic, international) due to unplanned grounding of Airbus
aircraft. At the PAT level, KFA reported a net loss of |253.9 crore (Idirect
estimate: |168.5 crore). It remained lower due to higher interest
and depreciation costs.
Revenue grows over 28% on strong growth in yields
KFA’s domestic revenues grew 11% YoY to |1,261 crore despite a 9.8%
reduction in total number of flights. The growth in this segment mainly
came in from a rise in yields per ASKM (up 16.1% YoY) on robust
demand for air travel. Also, the international segment that contributes
nearly 24% of total revenues reported robust revenue growth of 165.3%
led by 93% increase in total no of flights and 40.7% YoY rise in pax yield.
Bottomline improves but still remains in negative zone
Despite an improved operating performance, KFA reported a net loss of |
253.9 crore for the quarter on account of higher interest outflow for the
quarter.
Valuations
At the CMP of | 45, the stock is trading at 1.5x and 1.25x its FY11E and
FY12E EV/sales, respectively. The lower than expected financial
performance on account of high debt remains a concern for the company
in the rising interest rates and fuel cost scenario. However, with the return
of grounded aircraft and a strong domestic outlook, we also expect KFA
to improve its revenue and market share by 20% and ~1.5% in FY12E.
We have assigned an ADD rating to the stock with a target price of | 49
i.e. at 1.3x FY12E EV/sales.
During the quarter, KFA’s domestic pax-traffic increased by only 8% YoY
as against industry pax traffic growth of 21% YoY. This was mainly due to
due to a reduction in total no of domestic flights on account of unplanned
grounding of a few Airbus aircraft and shifting of some of the flights
towards international routes. On the other hand, international pax traffic
witnessed an impressive growth of 96.4% YoY led by a 93% increase in
the number of flights to cater to the strong demand growth in this
segment. The international division of the airline has benefited from
higher utilisation of fleets, improving code-sharing agreements and
focused customer services.
Segment wise performance
During the quarter, KFA reported a domestic EBITDAR margin of 21.9%
vs. 17.8% in the same quarter of the previous year. The international
EBITDAR margin also improved to 14.8% in Q3FY11 vs. -20.7% in
Q3FY10. The airline reported an improvement in operational performance
supported by high load factor, optimum utilisation of its fleet and
continued focus on the profitable route network.
Debt recast plans
During the quarter, the company has executed a part of the master debt
re-cast plan, which is as follows.
• Converted | 750.1 crore and | 553.1 crore of loans into 7.5%
preference shares and 8% cumulative redeemable preference
shares, respectively
• Interest rates on loans also fell by 300 bps
• Additional fund based loan facilities of | 768 crore and non-fund
based facilities of | 444.4 crore was sanctioned by the banks
• Converted a part of the working capital limits of | 297 crore into
working capital loans
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Kingfisher Airlines:: Rising yields drive growth...
In Q3FY11, Kingfisher Airlines (KFA) reported consolidated revenues of
|1,658.7 crore (up 28.1% YoY, 20.0% QoQ), which remained more or
less in line with our expectations (I-direct estimate: |1,690.1 crore). The
growth in revenue was mainly driven by strong growth in yield per
ASKM (domestic yields up 16.2% YoY, international yields up 40.7%
YoY) on robust demand despite a decline in the domestic market share
led by a reduction in the total number of flights. It declined 5.8% YoY to
30,883 (domestic, international) due to unplanned grounding of Airbus
aircraft. At the PAT level, KFA reported a net loss of |253.9 crore (Idirect
estimate: |168.5 crore). It remained lower due to higher interest
and depreciation costs.
Revenue grows over 28% on strong growth in yields
KFA’s domestic revenues grew 11% YoY to |1,261 crore despite a 9.8%
reduction in total number of flights. The growth in this segment mainly
came in from a rise in yields per ASKM (up 16.1% YoY) on robust
demand for air travel. Also, the international segment that contributes
nearly 24% of total revenues reported robust revenue growth of 165.3%
led by 93% increase in total no of flights and 40.7% YoY rise in pax yield.
Bottomline improves but still remains in negative zone
Despite an improved operating performance, KFA reported a net loss of |
253.9 crore for the quarter on account of higher interest outflow for the
quarter.
Valuations
At the CMP of | 45, the stock is trading at 1.5x and 1.25x its FY11E and
FY12E EV/sales, respectively. The lower than expected financial
performance on account of high debt remains a concern for the company
in the rising interest rates and fuel cost scenario. However, with the return
of grounded aircraft and a strong domestic outlook, we also expect KFA
to improve its revenue and market share by 20% and ~1.5% in FY12E.
We have assigned an ADD rating to the stock with a target price of | 49
i.e. at 1.3x FY12E EV/sales.
During the quarter, KFA’s domestic pax-traffic increased by only 8% YoY
as against industry pax traffic growth of 21% YoY. This was mainly due to
due to a reduction in total no of domestic flights on account of unplanned
grounding of a few Airbus aircraft and shifting of some of the flights
towards international routes. On the other hand, international pax traffic
witnessed an impressive growth of 96.4% YoY led by a 93% increase in
the number of flights to cater to the strong demand growth in this
segment. The international division of the airline has benefited from
higher utilisation of fleets, improving code-sharing agreements and
focused customer services.
Segment wise performance
During the quarter, KFA reported a domestic EBITDAR margin of 21.9%
vs. 17.8% in the same quarter of the previous year. The international
EBITDAR margin also improved to 14.8% in Q3FY11 vs. -20.7% in
Q3FY10. The airline reported an improvement in operational performance
supported by high load factor, optimum utilisation of its fleet and
continued focus on the profitable route network.
Debt recast plans
During the quarter, the company has executed a part of the master debt
re-cast plan, which is as follows.
• Converted | 750.1 crore and | 553.1 crore of loans into 7.5%
preference shares and 8% cumulative redeemable preference
shares, respectively
• Interest rates on loans also fell by 300 bps
• Additional fund based loan facilities of | 768 crore and non-fund
based facilities of | 444.4 crore was sanctioned by the banks
• Converted a part of the working capital limits of | 297 crore into
working capital loans
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