About Jet Airways (India Ltd.)
Jet Airways is India's largest private sector airline and is in business since
its first flight in May 5 1993. It has over 260 flights daily and links 44 destinations.
The Government has also given it a go ahead to commence daily flights to Singapore
and Kuala Lumpur from 1st April 2005 onwards. It has a fleet of 42 aircrafts.
Its key strategy is to keep same type of aircraft for lowering costs and because
of this they have 34 Boeing 747s. Jet operates 1,924 flights weekly. The promoter
is Mr. Naresh Goyal who owns 99.99% of the shares in the company through his
Tail Winds. Jet has grown from four to forty two aircrafts and with the government
looking for further liberalizing the aviation sector is looking to increase
frequency of flights and enter new markets.
About the IPO
The offer, through 100 per cent book building route, would be for 1.72 crore
(17.2 million) shares of Rs 10 each comprising a fresh issue of 1.42 crore (14.2
million) shares and offer for sale of 30.21 lakh (3 million) shares or 4.2 per
cent stake held by Isle of Mann registered Tail Winds Ltd, one of the promoting
entities.
Sixty per cent of the issue would be offered to Qualified Institutional Buyers.
Another 15 per cent would be available for allotment to non-institutional bidders
(high networth individuals) and the remaining 25 per cent to retail individual
investors.
The purpose of the IPO is to gain benefits of listing to enhance visibility
and brand name, raise capital and retire certain outstanding debt of IFC and
IDFC.
Jet Airways has reserved 1,200,000 equity shares for subscription by employees
at the offer price. Thus, the net offer to public would be 16,066,801 equity
shares.
Executive Summary
The coming year looks good for Jet Airways and the IPO should provide good returns
to people investing in it. The company is the largest private sector airline
in India with 42 aircrafts. They have a market share of 45.9 % of the domestic
market. With the government opening up the international market for private
operators gradually Jet would look to cater to international destinations and
increasing its revenues. It plans to do this by using its existing planes on
the routes that can be serviced. The government has given permission to fly
one plane daily to Kuala Lumpur and Singapore and this should add to the top
line as well. Jet has a fleet which is just two-thirds the size of Indian Airlines
its primary competitor but still it has managed to secure quite a large market
share. The company has 34 Boeing 747s out of all planes to keep the operational
charges lower. These planes are fuel efficient as well so that keeps cost low
as well. A part of the IPO proceeds will be used to repay debt and this will
bring down the interest cost significantly thus positively impacting the bottom
line in the next year itself. The economy is on the rise giving a boost to business
and tourism two areas from where Jet gets revenues.
However there 9 and 8 Aircrafts which are due for maintenance in fiscal 06 and
07 and this means that the airline will be one airline short throughout these
two years. Jet has entered into an agreement to lease an aircraft for the two
years though this will impact profits by adding to costs. There is also an expansion
plan, which has a projected outflow of 3000 crores over the next few years.
Because of all this the growth in profits in fiscal 05 may not be able to be
replicated in 06.
But for a long term investor this stock is a good pick to have a share in the
airline market of India, which is bound to take off, given the low penetration
levels here and the booming Indian economy.
Please use the link at the top to download the complete FREE report consisting
of:
- Executive Summary
- About the IPO
- About Jet Airways (India Ltd.)
- Financials
- Fuel Cost
- Employee Cost
- Other Operating Charges
- Selling and Distribution
- Aircraft Rentals
- Interest
- Revenues
- Operations
- Jet Airways mark
- Contingent Liability
- Use of the Proceeds
- Competition
- Income Statement
