SpiceJet slips 2.5% after Delhi HC order on share transfer row with K Maran

SpiceJet ended 2.5 per cent lower on the BSE at Rs 52.3 but recovered from an intra-day low of Rs 51.60 on Monday after the Delhi High Court asked the cash-strapped airline to deposit within six weeks an additional Rs 243 crore in connection with a share transfer dispute with ex-promoter Kalanithi Maran, owner of Sun group. In comparison, the S&P BSE Sensex ended marginally higher – up 0.16 per cent at 38,417 levels.
Maran has the right to seek status quo on SpiceJet’s shareholding if the amount is not deposited within the deadline, meaning the company won’t be able to raise new capital from the market through the issuance of fresh shares or stake sale, the Business Standard reported.

The trading volumes on the counter jumped 1.5 times on Monday, with a combined 6.8 million equity shares changing hands on the NSE and BSE. In past one month, SpiceJet had outperformed the market by gaining 16 per cent, as compared to the 1.8 per cent rise in the Sensex till Friday. The company is yet to announce its April-June quarter (Q1FY21) earnings.

SpiceJet’s Q4FY20 net loss of Rs 807 crore was lower than the analyst estimate of Rs 1,050 crore led by lower employee costs, lower maintenance and lower than expected Fx MTM loss. Yield moderation continued led by adverse route mix with an increase in the share of metro routes.

“SpiceJet was in urgent need of capital infusion even prior to COVID and the present crisis has only accentuated the liquidity crunch. SpiceJet continues to aggressively cut costs, re-negotiate contract terms and defer payments. However, there are material uncertainties on its ability to continue deferring its obligations and unwind them making the risk-reward unfavourable,” analysts at Centrum Broking said in Q4 result update. The brokerage firm downgrades its rating on the stock to “Sell” from “Reduce” with a target price of Rs 36 per share.