Airlines India, Indian Airlines

During the day Deccan Aviation, which dropped nealy 6% recovered its loss in late trade and closed up nearly 5%. Deccan Aviation has given ace returns among aviation stocks from 23 Aug 06 to 22 Sept 06. It has given more returns than its peers and the BSE Sensex. The company has given 28% returns, while the BSE Sensex has given 7% return.

Most of the aviation stocks are nearly 100% away from its 52-week high. However, Deccan Aviation is 33% away from it 52-week high

Deccan aviation is also trading above its simple moving averages. Its 30 days moving average on BSE is Rs 90.42 and 50 days moving average is Rs 83.68.

Today it closed at Rs 110.90, up Rs 5.15, or 4.87% with volumes of 18,51,816 shares, compared to its five-day average of 5,65,141 shares, an increase of 227.67%. It has touched an intra day high of Rs 113.80 and an intra day low of Rs 96.65.

Company
% return from 23-08-06 to 22-09-06
52-wk high
% diff from 52-wk high to CMP

Deccan Aviation
27.97
148.05
33.50

Jagson Airlines
1.13
44.9
100.89

Jet Airways
16.41
1280
95.30

SpiceJet
22.54
89.9
95.43

Sensex
7.28
12671.11
4.08

Groups: Air Transport

Company
Last Price
Mkt Cap (Rs Cr.)

Jet Airways
655.40
5,658.07

Deccan Aviation
110.90
1,088.82

SpiceJet
46.00
847.96

Jagson Airlines
22.35
23.80

Deccan Aviation is India’s largest private sector charter aviation company with a network of bases spanning seven locations across the country. Promoted and operated by senior officers from the Indian Army Aviation, Deccan Aviation launched services from the corporate base at Bangalore in September 1997. The company boasts a fleet of 9 helicopters and 2 fixed-wing aircraft deployed across its bases at Bangalore, Mumbai, Delhi, Ranchi, Hyderabad, Surat, Katra (J&K), and Sri Lanka.

Today’s Declaration

Director of Finance of Deccan Aviation, MG Mohan Kumar says that the net loss of Rs 110 crore from April-June was due to the induction of five aircraft.

The company is targeting market share of 25-28% by FY08. The company need control the cash burn and likely breakeven by FY08. In the next 15 months, the company will take delivery of about 7 airbuses and about 8 ATRs.

The company is raising USD 100 million in this financial year, which will give a cash flow for about 15 months. They are building up a sizeable network for the country on a low cost basis so that the public can depend upon the large network as well as the low fares.

They also expect ATF price to decline by 7-8% at least from October.

Expert Views

Sharmila Joshi of Asit C Mehta, “The numbers of Deccan Aviation weren’t good and while people expect them to make a bit of a loss, this was a slightly larger loss than what market expected. But if the stock corrects a little more from here then it will look attractive again. Two things have to be kept in mind. One is the fact that if one looks at the kind of order, the kind of airlines that all these airline companies have ordered for, which are all likely to come in the next couple of months or in the next year or so. It is quite staggering-share numbers or airlines that have been ordered.”

She further added, “The industry seems to be poised where they are expecting better infrastructure and lots more air traffic to happen in the next couple of years. The industry says it could be the biggest boom that one has seen. So if one were to believe that then low cost airlines like Air Deccan would be able to take advantage of that. Because of this negative surprise that had come with these bad numbers, one has to look at a price maybe corretcing from here by another 10-15%.”

Technical Analyst, Rajat K Bose, “Deccan Aviation is on a corrective swing now. But the major support area is around Rs 91, the low today for it was Rs 90.35 at the NSE. This is the level unless it goes below this then the stock would not be all that bad it can once again bounce back. If it can manage to cross Rs 101 and trade above that then its corrective swing would be considered over since the low has already been posted at Rs 90.35.”

Gaurang Shah of Geojit Financial Services, “If one go to see not only domestically but the airline industry overall the world scenario has not being doing very well. We have been going quite comfortable as far as the crude oil prices because 38-42% of the ticket pricing goes into the aviation turbine fuel. But given the fact that this industry we are quite underweight on, there are better sectors to look at whether it is Deccan Aviation or Jet Airways or SpiceJet.”

He further added, “I don’t think the sector can perform going forward, given the fact that they have got huge plans also coming up. If they are going to sustain these kinds of losses year on year, I don’t know going forward what is going to be the outcome for the investors. So not very gung-ho about this particular sector.”