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M a r k e t s h a r e f a l l s , o pe r a t i n g l o s s w i d e n s …
Kingfisher Airlines (KFA) reported consolidated revenues of | 1,342 crore
(down 19.1% YoY) that were marginally lower than our estimated
revenues of | 1,406 crore due to a sharp decline in passenger traffic. It
declined by 16% YoY on account of a 13% YoY reduction in number of
flights. Flight cancellations by the company also affected passenger
sentiment negatively. International operations, that accounted for 27% of
total revenues, have also been impacted negatively. Revenues in this
segment declined by 9.0% YoY due to a 13% decline in passenger traffic
despite a 6% YoY increase in the number of flights. On the cost front, the
operating cost rose 7% YoY led by 36% and 12% rise in fuel cost and
lease rentals, respectively. As a result, the company reported an
operating loss of | 350.5 crore vs. our estimated operating loss of | 240
crore. In addition, interest cost continued to remain higher and also rose
by 2.2% on account of a rise in the debt burden. However, a sharp spurt
in other income to | 200 crore vs. | 17.3 crore (Q3FY11) and | 102 crore
(Q2FY12) helped to taper its loss for the quarter.
ƒ Losses in market share due to sharp supply cuts
KFA’s domestic market share declined sharply by 470 bps YoY to
14.2% as the company cut down capacity of flights by 15% YoY
during the quarter. This move also impacted passenger sentiments
negatively. As a result, its market share at the end of December
2011 dipped further to 12.1%.
V a l u a t i o n s
At the CMP of | 27, the stock is trading at 1.5x and 1.3x its FY12E and
FY13E EV/sales, respectively. We continue to place KFA’s rating and
target price under review as rising concerns on the company’s liquidity
crunch due to heavy operational losses in the past few quarters have
undermined investor confidence in the past few months. Although the
recent positive policy reforms like allowing ATF import directly by Indian
carriers and 49% FDI by foreign carriers has improved the scope for long
term growth of the sector, fund infusion by the KFA promoter remains a
crucial issue for effective running of the business. Hence, unless we see
any positive development on this front, we continue to keep our rating
UNDER REVIEW on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M a r k e t s h a r e f a l l s , o pe r a t i n g l o s s w i d e n s …
Kingfisher Airlines (KFA) reported consolidated revenues of | 1,342 crore
(down 19.1% YoY) that were marginally lower than our estimated
revenues of | 1,406 crore due to a sharp decline in passenger traffic. It
declined by 16% YoY on account of a 13% YoY reduction in number of
flights. Flight cancellations by the company also affected passenger
sentiment negatively. International operations, that accounted for 27% of
total revenues, have also been impacted negatively. Revenues in this
segment declined by 9.0% YoY due to a 13% decline in passenger traffic
despite a 6% YoY increase in the number of flights. On the cost front, the
operating cost rose 7% YoY led by 36% and 12% rise in fuel cost and
lease rentals, respectively. As a result, the company reported an
operating loss of | 350.5 crore vs. our estimated operating loss of | 240
crore. In addition, interest cost continued to remain higher and also rose
by 2.2% on account of a rise in the debt burden. However, a sharp spurt
in other income to | 200 crore vs. | 17.3 crore (Q3FY11) and | 102 crore
(Q2FY12) helped to taper its loss for the quarter.
ƒ Losses in market share due to sharp supply cuts
KFA’s domestic market share declined sharply by 470 bps YoY to
14.2% as the company cut down capacity of flights by 15% YoY
during the quarter. This move also impacted passenger sentiments
negatively. As a result, its market share at the end of December
2011 dipped further to 12.1%.
V a l u a t i o n s
At the CMP of | 27, the stock is trading at 1.5x and 1.3x its FY12E and
FY13E EV/sales, respectively. We continue to place KFA’s rating and
target price under review as rising concerns on the company’s liquidity
crunch due to heavy operational losses in the past few quarters have
undermined investor confidence in the past few months. Although the
recent positive policy reforms like allowing ATF import directly by Indian
carriers and 49% FDI by foreign carriers has improved the scope for long
term growth of the sector, fund infusion by the KFA promoter remains a
crucial issue for effective running of the business. Hence, unless we see
any positive development on this front, we continue to keep our rating
UNDER REVIEW on the stock.
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