Shares in India's SpiceJet soar on Qatar Airways rumour

Budget carrier's shares climb as much as 8.5 per cent following rumours of a stake sale to Qatar Airways.

Shares in the Indian low-cost airline SpiceJet yesterday climbed as much as 8.5 per cent in early trading on the Bombay Stock Exchange (BSE) following rumours the carrier was in talks to sell a stake in its operation to Qatar Airways.

The stock increased more than 169 per cent last year on stake sale hopes. Local brokers said SpiceJet management had been looking to sell a stake to private equity or an airline at 75 to 80 rupees per share. Shares hit 47.8 rupees before falling back to 45.8 rupees in the late afternoon.

However, the airline issued a statement to the BSE describing the speculation as “premature”.

Qatar Airways has not commented.

SpiceJet, which has a market cap of US$392.4 million (Dh1.44 billion), is understood to be looking to raise $100m to $150m by way of equity dilution and/or debt.

“If the deal did go through this will help SpiceJet to get into the international market and have a strong partner,” said Sharan Lillaney of Angel Broking. “The airline is expected to post a profit in this quarter after a loss in the last quarter. This stock can see an upside of 15 per cent.”

Earlier this month there were reports that SpiceJet had shortlisted three foreign investors.

India’s aviation ministry said it had not officially been informed of an impending stake sale but a senior official said: “The information we have gathered is that SpiceJet may be selling a stake to Qatar ­Airways but we are waiting for a word from the airline.”

SpiceJet is engaged in a constant battle with Air India for the number three slot in terms of domestic market share and analysts say it is an ideal candidate for investment by foreign airlines.

Since the Indian government relaxed its rules on foreign airlines taking stakes in domestic carriers, there have been a flurry of rumours about likely deals.

Etihad Airways is expected to take a decision on whether to invest in Jet Airways in the next few weeks.