Karvy puts buy on SpiceJet.

>> Wednesday, November 26, 2008

Target price: Rs 16 

Karvy Stockbroking has maintained an ‘outperformer’ rating on SpiceJet, with a price target of Rs 16 in the wake of a fall in aviation fuel prices. 

“Lower ATF prices would lead to fall in airfares and that in turn would stimulate air travel. ATF prices are down by almost 40% from their peak in August 2008. ATF prices have come down to near October 2007 levels but the current airfares are still around 30% higher than airfares prevailing during October 2007,” the broking firm said in a report. 

“However, the general slowdown in the economy is expected to play its role and therefore, even though we expect the passenger traffic to improve, it would still be lower on a YoY basis. On the other hand, we expect the average fares to remain higher by around 30% on YoY basis,” it added. - ET