SpiceJet shares surge over 7% as promoter Ajay Singh to infuse Rs 500 crore in airline

Shares of SpiceJet rallied 7.5% to Rs 34 in Thursday’s trade on BSE after promoter and MD Ajay Singh offered to infuse about Rs 500 crore in the company in order to strengthen the financial position of the budget carrier.

The infusion will be done through subscription to equity shares or convertible securities on a preferential basis.

“The Board deliberated on the matter and agreed to issue equity shares and/or convertible securities/equity share warrants on a preferential basis to the Promoter and/or the Promoter Group on preferential basis, in one or more tranches for an amount of Rs 500 crore,” the company said in a filing.

SpiceJet further said that the fundraising will also be considered as an equity contribution by the promoters under the Emergency Credit Line Guarantee (ECLG) scheme, which will provide additional credit facilities of Rs 206 crore to the company.

The fundraise comes as reports claimed that the airline had been placed under enhanced surveillance by the aviation regulator DGCA. After rival GoFirst filed for bankruptcy, concerns also surfaced over SpiceJet’s financial viability.

According to a report by PTI, DGCA has placed SpiceJet under enhanced surveillance for more than three weeks now. The enhanced surveillance includes increased night surveillance and spot checks.
At 10.37 am, the scrip was trading 3.5% higher at Rs 32.2 on BSE. However, it has declined 18% year-to-date. From its 52-week high of Rs 52.4, the stock is trading nearly 40% lower.As per Trendlyne data, the average target price of the stock is Rs 43, which shows an upside potential of 33% from the current market prices. The consensus recommendation from three analysts for the stock is a ‘Hold’.

Technically, the stock’s day RSI (14) is at 62.8. The RSI below 30 is considered oversold, and above 70 is overbought, Trendlyne data showed. MACD is at 0.4, which is above its center and signal Line, this is a bullish indicator.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

Article source: https://airlines.einnews.com/article/644328136/SEWMHR1AvcPQxCcH?ref=rss&ecode=vaZAu9rk30b8KC5H

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