SpiceJet has announced its decision to open a Qualified Institutional Placement (QIP) to raise up to ₹3,000 crore, setting the floor price at ₹64.79 per share. The company made this announcement on September 16 through a preliminary placement document submitted to stock exchanges, signalling a significant development for the airline and the broader share market investment landscape.
Potential discount for investors
Although the floor price is set at ₹64.79, SpiceJet has hinted at the possibility of offering a discount. According to CNBC-TV18, sources have indicated an indicative issue price of ₹61.60 per share, which reflects a discount of 20.81% compared to the closing price on Monday.
This potential reduction presents an interesting opportunity for those involved in share market investment, as discounted shares can attract more buyers, thereby increasing demand.
SpiceJet’s efforts to raise funds
While the exact size of the QIP has not been officially confirmed, SpiceJet has previously secured board approval to raise up to ₹3,000 crore. The funds raised through this initiative will be used to strengthen the airline’s operations.
According to the company, the infusion of capital will enable it to reduce debt and improve liquidity, making it a potentially lucrative option for those considering share market investment in the airline sector. Additionally, the funds are expected to support the airline’s efforts to expand and resume more aircraft operations.
SpiceJet's financial performance and challenges
Despite efforts to bolster its financial health, SpiceJet reported a challenging performance in the June quarter due to reduced flight operations. The airline saw a consolidated net profit of ₹158 crore in Q1 FY25, a 20% drop compared to the previous year. Total income for the quarter also fell by 8.3%, reaching ₹2,077.7 crore.
However, on a more positive note, the airline's net profit after tax increased by 24% compared to the March quarter, indicating a potential recovery. For those exploring share market investment, these mixed signals suggest a complex but evolving financial outlook for the airline.
Recent developments and stock performance
SpiceJet's stock has shown notable movement in recent days. On Monday, shares surged by 8%, and over the past five days, the stock has risen by over 21%, largely driven by the anticipation of the QIP and recent financial restructuring.
Year-to-date, the stock has seen a 28% increase, reflecting growing confidence among investors. This performance makes SpiceJet an intriguing option for those looking at share market investment opportunities.
Legal and debt restructuring updates
In parallel to its fundraising efforts, SpiceJet is also addressing legal and financial challenges. The airline recently approached the Supreme Court, contesting a Delhi High Court decision that grounded three of its aircraft due to lease payment defaults.
Additionally, SpiceJet finalised a debt restructuring deal with Carlyle Aviation on September 10, which includes converting lease arrears into compulsorily convertible debentures. Carlyle Aviation also converted $30 million of SpiceJet’s debt into equity at ₹100 per share, further stabilising the company’s financial structure and making it a more attractive option for long-term share market investment.
Chairman’s stake and future outlook
In an attempt to improve the airline's financial stability, SpiceJet's chairman, Ajay Singh, is reportedly considering selling more than 10% of his personal stake in the company. This move is expected to raise additional capital, with the funding round likely to conclude by the end of September. Investors keen on share market investment should monitor these developments closely, as they will have a significant impact on the airline's future growth and profitability.
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