MUMBAI: CLSA has upgraded Jet Airways to 'buy' from 'sell' earlier after the airline carrier reported better-than-expected quarterly results on the back of rising yields and high cost discipline. The company reported pre-exceptional profit before tax of Rs 45.6 crore after five successive quarters of losses.
"Yield improvements, particularly in the international business, helped drive 30% revenue growth. Costs remained under control and helped drive a 113% YoY increase in Ebitdar," the brokerage said in a report.
CLSA is of the view that a strong yield environment, focus on route utilisation and tight cost control should help sustain performance.
"Given the improved performance in international and cost discipline in domestic, we now expect improved profitability over FY13-14, driving significant upgrades. Continuing strength in operating performance and debt reduction leaves room for upside," the report said.
The brokerage has upgraded the stock with a target price of Rs 500, an upside of 30 per cent, from the current market price.
Institutions have turned bullish on the Indian aviation sector after both Jet Airways and Spicejet reported robust quarterly results.
Bank of America-Merrill Lynch has upgraded Jet Airways and SpiceJet to 'buy' from 'underperform' on expectations that these companies would return to profit in FY14. It has increased Jet Airways price target to Rs 480 from Rs 210 earlier.
At 11:10 am, the stock was at Rs 383.50, up 1.58 per cent, on the BSE. It touched a high of Rs 384.75 and a low of Rs 378 in trade today.
The Economic Times News
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