Jet Airways: Will Strategic Investor Make It Investable ?

January 16, 2019

If news sources are to be believed then Strategic Investor is planning to raise its stake by dilution of Naresh Goyal stake along with his exit from active management. 

Proposed Infusion and Debt Position - 

- As of now Strategic Investor can buy stake worth 25% of total share capital  which means  an infusion of Rs.816 cr (approx) as per today Market Cap of Rs.3265cr. 

- Debt as of Sep 2018 is at Rs. 5018 cr in Long Term and Rs.211cr along with Rs.7937cr in Trade payables. This debt is repayable in FY 20 & F Y 21. 

- Fleet has 123 aircrafts with most of them having higher age which results in more fuel and ownership cost.

Target Investing View - 

- On Equity Infusion it will give comfort to lender for refinancing and increasing debt repayment timeline.

- Strategic Investor infusion alone will not help the company overturn the issues it is facing. There are operational and financial issues with a market share loss. 

- Company needs a good top management who can handle the burden and knows the industry as Crude prices will be higher in next 9-12 months due to production cuts.

Recommendation - SHORT TERM TRADE BUT NOT INVESTMENT

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