Sunday, March 28, 2010

Spice Jet.....A Star in making....Rs 57.85

Sun, Mar 28 04:54 AM

Over a month after they applied, the decks have been cleared for an in-principle approval to low-cost carriers IndiGo and SpiceJet to fly abroad.
The Sunday Express has learnt that the Civil Aviation Ministry has given its go-ahead and procedural formalities will now be completed by the Directorate General of Civil Aviation.
While SpiceJet completes its stipulated five years of domestic operations on May 23, IndiGo meets this condition only on August 4, 2011.
Both wanted time to get their requisite infrastructure in place — and approach foreign governments — so they moved requests for in-principle approvals.
Until now, Jet Airways and Kingfisher Airlines are the only two private carriers flying abroad. When the government first gave its nod for private carriers to fly abroad, only Jet Airways and the former Air Sahara were eligible. However, Jet took over Air Sahara and similarly, Kingfisher Airlines benefited from Air Deccan's rights, once it qualified, after the merger.
The criteria laid down for a private carrier to be eligible for consideration to fly abroad is a five-year track record of uninterrupted domestic operations with a minimum fleet size of 20 aircraft. Both these airlines already have the necessary fleet size and will, in due course, meet other criteria. Taking note of this, sources said, the government agreed to give in-principle clearances.
While Jet, Kingfisher and Air India have faced heavy losses over the past few years due to high operation costs, IndiGo and SpiceJet have been among the better performers and even generated some operating profits. Both these airlines have a little over 20 aircraft in their fleet with IndiGo planning to acquire some more aircraft this year.
Unlike Jet and Kingfisher, the two airlines are not looking at long haul operations to Europe and the US. Restricting themselves to a fleet of narrow-bodied aircraft — SpiceJet has a predominantly Boeing 737s-800 while IndiGo has Airbus 320s — the two airlines have targeted the South Asia region and slightly beyond.
In fact, SpiceJet, which plans to start operations from June 1, is looking only at Kathmandu, Dhaka and Colombo to begin with even though its earlier plans included the Middle-East. IndiGo is looking not just at the SAARC region but also ASEAN and Middle-East.
Government sources pointed out that in the past few years there has been a proliferation of low-cost carriers in these sectors, particularly from the Gulf. Relatively new carriers like Air Arabia, Jazeera Airways, Mihin airlines of Sri Lanka, UAE-based RAK Airways and now even FlyDubai airlines — some with even less than five years of domestic experience — have made a significant impact on the market. Most of these are clocking over 80 per cent passenger load factor.
Delaying the entry of better established Indian low-cost carriers, sources said, may see the market move decisively in favour of foreign airlines like these. Given that India has worked hard over the past few years to either rework or negotiate afresh its air bilateral agreements to cater for multiple designation of airlines, operationalising these decisions may be less cumbersome than when it was first implemented.
Pranab Dhal Samanta

My Comments:
I feel that Spice Jet is a very good LT pick for multiple returns.....Those who can hold it and not get perturbed by the fluctuation of the price......I think Spice Jet is worth a bet.....I am bullish on Spice Jet........ 


  1. Dear MR Rajeev
    Spice jet is exellent recommendation, very good annalysis no doubt is worth investing at current rate.

    There is good news about Marg, Value unlokcing
    going to tack place, this company some what i missed out in the earlier run, Can I enter at present rate around Rs 175

    Posted by : excelajay from MMB

    Marg Karaikal Port, a wholly-owned subsidiary of Chennai-based infrastructure company Marg, may go for initial public offering (IPO) in the next financial year to meet its sales and operational requirements.
    “Although we have not fixed the date for the IPO it is most likely to happen in the next financial year. The purpose would largely be meet the sales and operational requirement of the company,” R Natarajan, vice president, finance at Marg Karaikal Port, told. The Karaikal Port is supposed to be valued at Rs 800 crore, which is more than its parent, Marg’s market capitalisation of Rs 567 crore as of Friday’s close of its shares.
    Marg recently raised around Rs 800 core from banks to fund the second phase of Karaikal port. It would have an equity component of Rs 428 crore, while the cost of the development would be around Rs 1,200 core. An additional Rs 100 crore would be required for the expansion of breakwaters and around Rs 300 crore of forex funding for the equipments, which would be purchased through Euro loans. “With the additional costs second phase development would increase to Rs 1,500 crore, however the breakwater expansion is not the immediate priority and it can wait for some time,” Natarajan said.
    State Bank of India, IDBI Bank and Bank of India are main lenders. Karaikal Port, which is situated at the center of Tuticorin and Chennai port is part of the union territory of Puducherry. “Together the total demand for coal from the hinterland of Karaikal port stands at 40 million tonne and is expected to increase by another 10 to 15 million tonne every year. Such demand cannot be met by the already saturated ports of Tuticorin and Chennai. We expect to be the major port on the east coast of India in next two years time,” V Raman, head of projects at Karaikal Port, said.
    As a part of second phase development, the company is building three new modernised berths with conveyor belts to help direct offloading of cargo, which will be completed by 2011-12. The sea channel would also be deepened by more than two and half meters to 16.5 meters to make the passage much easier for Panamax size vessels. The cost of dredging and de-silting of the channel has been put at Rs 20-25 crore annually.
    “We made a profit of Rs 5 crore from the operation of the first two berths, and once all the five berths would be operational we are likely to make a net profit of Rs 50 crore,” said V Raman.

  2. Dear MR Rajeev

    Your Excellent pick Surya Roshini, I have
    purchaseed 500 share of Rs 40 as soon you have recommended, But iam planing to deviate from usal practise of booking 50% of holding (It is nearing Rs 79), there is lot of expansion programmes are going to take place which you khow very well iam reproducing for benefit of the readers

    We are planning huge expansions for the Surya Group. We are planning to set up a 1,000-MW power plant and a steel plant with a capacity of 5 million tonnes a year, both in Karnataka,” said Mr J.P. Agarwal, Chairman and Managing Director, Surya Group.

    Mr Agarwal said the two projects would require an investment of Rs 20,000 crore and the company plans to raise this through a mix of debt and equity.

    We will also bring an IPO (initial public offering) for these projects which will be operated through a different company called Surya Vijaynagar Power and Steel and we will also rope in foreign investors for this purpose.”

    Meanwhile, Surya Roshni launched energy efficient T5 and T8 tubelights, which the company claims can save up to 85 per cent power.
    Surya Roshini, a Gujarat based company and a lighting and steel pipe solutions provider is diversifying into cement production.

    It is setting up a 20 lakh tpa cement plant with an investment of Rs. 11000 million and it is likely to go operational by 2012. According to sources, proximity to ports, availability of raw materials and fast track clearances made the company to foray into this sector. The company has formed a subsidiary Surya Global Cement Ltd to implement the project....

    Mr Agarwal said that Surya is also setting up two steel pipe manufacturing plants in Gujarat and Madhya Pradesh with a total investment of around Rs 550 crore.

    The two plants would start production in the next fiscal and the company is aiming for a turnover of more than Rs 5,000 crore by 2011-12.

  3. nirash,

    the company is expansion, the company is good. you don't have to book profit, instead add on dips, see their figure of expansion and turnover of 5k is big.

    I think you stick with it. Rajeev may provide more on that :)

  4. please visit my blog where Irecommended SPICEJET at 37. It will surely be 90-100 in the next 12 months

  5. Dear Rajeev Bhai
    I still wanna confirm that why you are not convinced with Aptech {director RJ] or NIIT in e learning sector, and both hve not performed yet n are way behind their previous highs.

    As you said that power and infrastructure will be the next best bet,,,,,so I would request you to highlight one value pick from each sector, We all will appreciate………

  6. I just read one of the blog and found this, please read……

    I’ll share a true story. Somewhere in 2001, if I remember correctly, two of my relatives, both brothers got around Rs. 50 lakhs (post-taxes) each from the sale of some ancestral property. One of the brothers, invested that money in a property of equal value while the other invested it all in a single stock. Both of them of course had and continue having their regular source of income and funds.

    The brother who invested in property is decently satisfied today. He gets a regular rental income and the property today is easily worth Rs. 1.5 cr. Of course he has to take care of repairs, tenants, maintenance, etc. But still overall, he has done much better than keeping his money in a bank FD.

    The other brother had decided to invest all his money in a single stock at around Rs. 30 a share. To most people it might sound risky and illogical, but his logic was that he had researched the company very well and believed in the company. He knew there would always be chances of a loss, but he was willing to take it. Also the fact that this money was inherited and in the form of a bonus, allowed him to take more risks. He didn’t mind investing for the next ten to fifteen years.

    Now over a period of almost 9 years, the same stock he had invested at Rs. 30 is worth around Rs. 1,800. In these 9 years, he virtually did nothing. He didn’t even bother looking at stock prices one a year. He didn’t have to search for a property, go to the sub-registrar, pay stamp duty, find tenants to earn dividend, he did not have to bother about maintenance work on property and didn’t have to fear about fake property documents, scams, etc.

    His initial investment of Rs. 50 lakhs today is worth Rs. 30 crores. This excludes the regular income he has earned in the form of dividends. If he was to sell and make a profit of Rs. 29.5 crores, he will not have to pay a single rupee as taxes. Long term capital gains on the stock market are completely tax free. He can sell at the click of a button, unlike his brother who will need to vacate the tenants and then try and find a buyer, go to the sub-registrar, etc.

    1. Invested Rs. 50 lakhs in Property 9 years ago = Rs. 1.5 crores

    2. Invested Rs. 50 lakhs in a Stock 9 years ago = Rs. 30 crores (Tax Free)

    Anybody from the world of stock markets will already be knowing this company. But the beauty is that even if you are not from the world of stock markets and investing, it is almost 100% certain that you know this company and you would have very well known about it in 2001 and even before 2001. I knew about this company every since I was a child, in fact even my grandfather used to use products made by this company. Today I use products by this company every single day. Even now I am using one.

    I’ll keep you a bit curious till my next post to tell you more about this company. We can all learn from such examples how we can detect and invest in companies that have the power to change our financial future and beat inflation hollow. In the meantime, try finding out more about this company, go through balance sheets, financial statements and try to understand business models. Any guesses what company this is?

  7. Regarding Surya roshni, it is good to have expansion plans but their debt/equity is already relatively high and the promoter holding is not much to cheer about. So the expansion news have made me slightly wary. How much more dbt can they take before it becomes too much. I dont want to see another suzlon like situation. Opinions are welcome.


  8. Rajeev bhai,

    Compared to Spicejet i personally think kingfisher airlines is better in terms of availability of flights,better quality service etc.The best thing is the price difference between spicejet and kingfisher airlines is just 100 or 200 rs most of the times. I had to book tickets to fly to banglore and when i compared spice and kingfisher i felt kingfisher is far better in terms of service.

    just my two cents,

  9. Hi Rajeev ,

    As you have written that DQ is on expensive side on its valuation but still a good stock. Do you think it is buy at 120 rs . As i got little allotment.

  10. Hi Rajeev,

    Spice / Jet / Kingfisher; at better operations and limited losses Spice looks attractive.

    Lately so much buzz in Jet counter where as Jet too is loosing its market share and losses are upward.

    Kingfisher has large operations but balance sheet shows huge losses(08-09 due to air deccan purchase). Do you think This too is a good stock like Spice?

    Textile industry has not shown any great upward trends so far; any stocks you think are possible to move upward in coming times and good from LT investments.


  11. hi rajeev,
    any views on spice mobile

  12. Hi Sandeep,

    What stock is this? Obviously that is the big question raised by your post. :D

  13. @Raima:

    I asked about Spice Mobiles recently. Kindly use the search box on the top right next time.

    For this time, follow the comments on this link


  14. Hi Rajeev,

    In case you happen to track any of following stocks do share your views

    Spice Mobile
    Andrew Yule
    Paper Products
    Murli Industries
    Future Capital
    Punjab Nat Bank
    Western India Shipyard
    Gitanjali Gems
    Gujarat Ambuja Exports


  15. Hi Rajeev,

    Whats your take on Sugar space if happen to track, specially

    EID Parry
    Bajaj Hind


  16. Vijay,
    In any of the stock I track IFCI.....and none others so no view on them....IFCI , I am recomending here since long...