Jet Airways stock a no-go for traders, say analysts

NEW DELHI: Jet Airways saga has continued to take a toll on the airline stock in the New year as well.

The scrip has lost 6 per cent this calendar, taking its total losses to 68 per cent in the last one year, but analysts have warned traders not to get swept away by heavy news flow on the counter. Avoid the scrip till clarity emerges on the airline’s bailout, they said.

“Jet Airways with all the challenges, is in a difficult situation. Turning around any company is difficult, but turning around an aviation company is a daunting task. It’s better to stay away. It is so volatile that for even seasoned traders, that anyone could get trapped. Money can be made elsewhere,” Jagannadham Thunuguntla, Centrum Broking told ET Now.

Jet Airways’ lender consortium led by SBI is working on various cost cutting measures, debt reduction and funding options. There have also been reports that existing investor Etihad is bargaining hard for any additional share purchase that could potentially offer lifeline for the cash-strapped airline.

“I am not too sure about who could probably come and repair the business of Jet Airways. We will wait and see how exactly the situation pans out. But, as of now, I will not get into the business for investments,” said Deven Choksey, MD, KR Choksey Investment Managers.

Choksey told ET Now that aviation business should generally be held in the hands of the stronger promoter, who can withstand the kind of swing in the business.

In every eight years, Choksey said, aviation businesses globally have at least two or three rough patches.

“There you require the strong promoter with a deep pocket who could possibly sustain rough weather,” he said.

Meanwhile, Chairman Naresh Goyal has told the State Bank of India that he is ready to invest up to Rs 700 crore in the airline on the condition that his stake does not fall below 25 per cent, PTI reported.

ET on Thursday reported that Etihad Airways CEO Tony Douglas has communicated to the lead lender that it will not pay a rupee more than Rs 150 a share for infusing funds and sought a complete exit by Naresh Goyal and his family from any management or even advisory role in the Indian carrier.

Sudip Bandyopadhyay said Etihad is trying to get a good bargain. “I am sure the initial demand on pricing the shares would have been something close to the market price. Etihad is trying the other route. It is talking about a ridiculously low price and trying to derive a hard bargain. They have been advised by lawyers; they know exactly what needs to be done and what is feasible. They will have to come. They do not have a much of choice, otherwise their own investment sinks.”

For Jet lenders, Bandyopadhyay said that there are little options left. “Some deal has to happen with Etihad coming in, but they will try and extract their pound of flesh,” he said.