SpiceJet Stock Ends At Eight-Month High On Boeing 737 Max Clearance
Shares of SpiceJet Ltd. posted their biggest intra-day gain in nearly a year after the carrier received clearance to again fly its 737 Max aircraft.
After nearly two years, the U.S. Federal Aviation Administration cleared the Boeing's 737 Max for flight. The clearance was announced after a "comprehensive and methodical" 20-month review process, the regulator said.
The 737 Max jets, the key to SpiceJet's fleet, were grounded in 2019 after two deadly crashes in a short span of time. The airline expects the jets to return to operations by the first quarter of 2021.
"SpiceJet can also receive compensation from Boeing for the 737 Max grounding, which could be in the range of Rs 1,000-1,200 crore," HSBC Global Research had said in a note on Wednesday.
A strong cargo revenue and deferred expenses, according to HSBC, have helped the airline report better-than-expected second-quarter results. The research firm upgraded the stock to 'buy' from 'hold', and raised its price target to Rs 80 from Rs 26.5 apiece earlier, citing abatement of the survival risk of the carrier.
Of the nine analysts tracking SpiceJet, seven have a 'buy' rating and one each suggests a 'hold' and a 'sell'. The average of Bloomberg consensus 12-month target prices implies an upside of 9.9%.
Shares of SpiceJet ended 12.2% higher—the most during the course of a trading day since March 2019—to Rs 74.35 a piece.
Besides, the scrip has risen for the fourth straight day—its longest winning streak in more than two months—and has gained 35% during the period.