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F u n d i n f u s i o n a k e y t ri g g e r , g o i n g f o r w a r d …
Kingfisher Airlines (KFA) reported consolidated revenues of | 1,528 crore
(up 10.5% YoY, down 18.8% QoQ) that were lower than our estimated
revenues of | 1,680 crore due to a higher-than-expected drop in yields
domestically. It declined 16% YoY. International operations, that
accounted for 25% of total revenues, performed marginally better
compared to the domestic segment. Revenues in this segment grew
11.0% YoY mainly due to 8% YoY increase in yield. On the cost front, fuel
costs continued to remain higher and rose sharply by 70% YoY. With
lower revenues and high operating costs, the company reported a net
loss of | 469 crore for the quarter.
ƒ Lower yields and higher fuel costs dent margins
During the quarter, yields for the domestic segment remained under
pressure partly due to the competitive pricing strategy adopted by
major competitors and partly due to an increase in the supply
(ASKM). As a result, KFA’s domestic yield declined 16% YoY to | 4.2
per ASKM. Fuel prices for the quarter rose over 35% YoY and with
9% increase in the departures and rupee depreciation, fuel cost for
the quarter went up by over 70% YoY. Interest cost rose
sequentially by 9% to | 334 crore due to an increase in debt. As a
result, its loss for the quarter further widened to | 469 crore.
V a l u a t i o n s
We have revised our revenue forecast downwards by 7% for FY12E
taking into account the current quarter’s dismal performance. At the CMP
of | 25, the stock is trading at 1.2x and 1.0x its FY12E and FY13E EV/sales,
respectively. We are placing KFA’s rating and target price under review –
the stock price has come off 40% in the past three months as rising
concern on the company’s liquidity crunch for running the business has
undermined investor confidence. However, we believe, any positive
policy reforms like rationalisation of domestic taxes and allowing foreign
direct investment (FDI) are key positive triggers for KFA and the industry,
going forward. Hence, unless we see any development on fund raising or
policy reforms, we will continue to keep our rating UNDER REVIEW.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
F u n d i n f u s i o n a k e y t ri g g e r , g o i n g f o r w a r d …
Kingfisher Airlines (KFA) reported consolidated revenues of | 1,528 crore
(up 10.5% YoY, down 18.8% QoQ) that were lower than our estimated
revenues of | 1,680 crore due to a higher-than-expected drop in yields
domestically. It declined 16% YoY. International operations, that
accounted for 25% of total revenues, performed marginally better
compared to the domestic segment. Revenues in this segment grew
11.0% YoY mainly due to 8% YoY increase in yield. On the cost front, fuel
costs continued to remain higher and rose sharply by 70% YoY. With
lower revenues and high operating costs, the company reported a net
loss of | 469 crore for the quarter.
ƒ Lower yields and higher fuel costs dent margins
During the quarter, yields for the domestic segment remained under
pressure partly due to the competitive pricing strategy adopted by
major competitors and partly due to an increase in the supply
(ASKM). As a result, KFA’s domestic yield declined 16% YoY to | 4.2
per ASKM. Fuel prices for the quarter rose over 35% YoY and with
9% increase in the departures and rupee depreciation, fuel cost for
the quarter went up by over 70% YoY. Interest cost rose
sequentially by 9% to | 334 crore due to an increase in debt. As a
result, its loss for the quarter further widened to | 469 crore.
V a l u a t i o n s
We have revised our revenue forecast downwards by 7% for FY12E
taking into account the current quarter’s dismal performance. At the CMP
of | 25, the stock is trading at 1.2x and 1.0x its FY12E and FY13E EV/sales,
respectively. We are placing KFA’s rating and target price under review –
the stock price has come off 40% in the past three months as rising
concern on the company’s liquidity crunch for running the business has
undermined investor confidence. However, we believe, any positive
policy reforms like rationalisation of domestic taxes and allowing foreign
direct investment (FDI) are key positive triggers for KFA and the industry,
going forward. Hence, unless we see any development on fund raising or
policy reforms, we will continue to keep our rating UNDER REVIEW.
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