Financial

Reporting & Analysis

S P I C E J E T & I N D I G O
INTRODUCTION

01 Classifications
Aviation Industry is classified into Military & Civil

02 Market Size
India has become the third largest domestic aviation
market in the world and is expected to overtake UK to
become the third largest air passenger* market by
2024.

03 Investment
India’s aviation industry is expected to witness Rs
35,000 Crore (US$ 4.99 billion) investment in the
next four years. The Indian government is planning
to invest US$ 1.83 billion for development of airport
infrastructure along with aviation navigation services
by 2026.
 INTRODUCTION
• Parent company – Inter Globe Enterprises

• Indigo was set up in early 2006 by Rakesh Gangawal

• USP – On Time performance , Lowest price

• Fleet of 245 aircraft including 89 new generation A320 NEOs, 129

A320 CEOs, 21 ATRs and 6 A321 NEO

• IndiGo is India’s largest passenger airline with a market share of

47.0% as of August, 2019.

• IndiGo is a very quality conscious airline and passenger safety is

paramount to company’s mission

• Revenue – US$3.5 Bn

• Net Income – US$ 22.43 Billion

 Liquidity Ratio

Liquidity Ratios Mar – Mar- 18 Mar- 17

19
Current Ratio 2.26 2.39 1.75
Quick Ratio 2.24 2.36 1.72
Inventory Turnover Ratio 134.77 125.64 113.89

Interpretations:

Current Ratio- The company's current ratio deteriorated and stood at 0.2x during FY19,
from 2.4x during FY18. The current ratio measures the company's ability to pay short-term
and long-term obligations.

As Company is having a quick ratio higher than one can instantly get rid of current
liabilities.
Profitability and performance Mar-19 Mar-18 Mar-17
Net Profit Margin 0.54 9.74 8.92
Return on Capital Employed 2.11 14.94 15.91
Return on Equity 2.24 41.73 52.01
Return on Assets 0.68 11.72 10.62
Earning Per Share 4.06 58.33 45.9
Interpretations:

• The ROE for the company declined and down at 2.3% during FY19, from 31.7% during
FY19. The ROE measures the ability of a firm to generate profits from its shareholders
capital in the company

• The ROA of the company declined and down at 2.7% during FY19, from 12.2% during
FY18. The ROA measures how efficiently the company uses its assets to generate
earnings.
 Solvency Ratio

Liquidity Ratios Mar – Mar- 18 Mar- 17

19
Total debt / equity 0.32 0.32 0.63
Cash Coverage ratio 6.21 11.49 11.43
Time Interest Earned Ratio 2.79 9.24 22.59

Interpretations:

• The company's interest coverage ratio deteriorated and stood at 0.7x during FY19,
from 10.2x during FY18. The interest coverage ratio of a company states how easily a
company can pay its interest expense on outstanding debt. A higher ratio is preferable.
 Strengths Weakness
• Low fares • Less difference
• High Service Quality • Sustaining Profits
• Operational Efficiency
• High Brand Awareness S W • Over dependence on
volumes

SWOT
Threats
Opportunities
• Competition from other
• Growing demand for foreign
travel O T brands
• Fluctuation in Fuel Prices
 Non- Financial Info
1.IndiGo founders tiff 2.0. Rahul Bhatia files for
arbitration at London court against Rakesh
Gangwal. The development comes weeks after 2.Bhatia vs Gangwal: This time, the focus may
changes in the company, as agreed upon by the
be on IndiGo's shareholding. Rahul Bhatia has
founders
taken Rakesh Gangwal to London's arbitration
court. This could very well be the final chapter
in the fight

4.No luggage! Here is what could have happened

3.IndiGo appoints Pallavi Shardul Shroff as a first to IndiGo's Delhi-Istanbul flight.
independent woman director. We explain how headwinds, longer flying time
Lack of an independent woman director was one of and the need for more fuel may have forced
the issues raised by co-founder Rakesh Gangwal IndiGo to shed the luggage
 INTRODUCTION

• SpiceJet Limited is an Indian low cost airline headquartered

in Gurgaon, India. It is the second largest airline in the country by
number of domestic passengers carried, with a market share of
13.6% as of March 2019.

• The airline operates 312 daily flights to 55 destinations, including 47

Indian and 7 international destinations from its hubs
at Delhi, Kolkata, Mumbai and Hyderabad.

• Vision : SpiceJet Limited has a vision for total customer satisfaction

and enhancing stakeholders’ value.

• Mission : SpiceJet’s mission is to become India’s preferred airline

with the highest consumer value through honest and ethical conduct
of the business.
 Liquidity Ratio

Liquidity Ratios Mar – 19 Mar- 18 Mar- 17

Current Ratio (X) 0.38 0.30 0.29
Quick Ratio (X) 0.34 0.26 0.25

Interpretations:

• As the current ratio is less than 1.0, during crisis the company will not have enough to pay for
its short term obligations and liabilities.

• The quick ratio helps the management to determine whether they are maintaining optimum
levels of Quick assets so as to take care of its short term liabilities in their balance sheets.
When it's less than 1.0, the company is in a spot where the company will be volatile dealing
liabilities.
 Solvency Ratio

Solvency Ratios Mar – 19 Mar- 18 Mar- 17

Total Debt/Equity (X) -2.78 -18.03 -1.68
Cash coverage ratio 2.64 11.43 4.35
Time interest earned ratio -0.62 7.62 7.95

Interpretations:

• Solvency ratios are primarily used to measure a company's ability to meet its long-term
obligations.

• The lower Solvency ratio of SpiceJet indicate financial struggles in the future. As SpiceJet has
took over the the flights From Jet airways which has lead to high investments and debt. The
surety of gaining profits are still on the edge with increasing competition and fluctuating oil prices.
 Profitability and performance Mar-19 Mar-18 Mar-17
Net Profit Margin -3.31 7.18 6.90
Return on Capital Employed -16.54 65.07 81.82
Return on Assets -6.30 13.46 14.28
Return on Equity 90.13 -1318.80 -70.71
Inventory Turnover Ratio (X) 64.54 54.70 62.82
Earning per share -5.04 9.30 7.13

Interpretations:

• Profitability Ratios are that helps us understand whether the company is able to generate
enough sales relative to its expenses during a specified period. But in this case of SpiceJet
the ratios are volatile for the last few years.
 Strengths
Weakness
• Strong backing by the promoters
• One of the largest low carriers in India • Low market share due to presence of
• Good presence in the market due to its significance competition
• Has limited destinations as compared to

S W
branding and advertising
• Dynamic Fare Structure that are other airline service
affordable and comparatively lower those • Frequent Offers which can impact their
other airlines. revenue generation thereby facing a lot of
• Good reachability to about 55 destinations loss in business
• High Airport and Fuel cost

Opportunities
SWOT Threats
• Middle class taking to the skies due to
Low fares • Strong competition in LCC segment
• More opportunities to grow on popular • Rising Fuel Costs
routes and destinations
• International tie-ups would boost brand
image and reach
O T • Changing Government Policies

• Partnership with tourism sector thereby

huge market potential
• Tax holiday on leasing of aircraft
 Non- Financial Info
1.SpiceJet to take four 737 MAX planes of Jet
Airways SpiceJet has grounded its 13 MAX
aircraft and globally, these planes have been
barred from flying since March this year in the
wake of two deadly crashes involving the aircraft.
3.SpiceJet reports a highest-ever quarterly profit in
Q1 backed by Boeing reimbursements, revenue
rises 35%In terms of operational parameters,
SpiceJet's average domestic load factor for the
quarter was 93.8 percent..
2.SpiceJet Q1 PAT seen up 449.8% YoY to Rs.
139.7 cr: Prabhudas LilladherNet Sales are
expected to increase by 24.3 percent Y-o-Y
(up 9.8 percent Q-o-Q) to Rs. 2,778.3 crore,
according to Prabhudas Lilladher.
4.SpiceJet cancels two flights on technical
glitches SpiceJet admitted the developments but
said passengers were informed accordingly
without divulging much information
 CONCLUSION
At present, Indigo has a market share of 43
percent, which is more than three times that
of SpiceJet (13.5 percent). Inter-Globe’s
market capitalization is close to eight times
that of the smaller rival.

Although both companies are doing good in

market but because Indigo has higher
market cap and flights connecting to metro
cities, Indigo will have dominant market
share.
Thank you

Anandhu Ajith Vyas

Sreehitha Konidala
Raj Vijayvargia
Siddharth Sharma
Anmol
Nikunj Sharma
Aswin Sasidharan