3QFY2012 Result Update | Airlines

February 7, 2012

SpiceJet
Performance Highlights
Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit
Source: Company, Angel Research

NEUTRAL
CMP Target Price
%chg (yoy) 41.6 (116.7) (1,536)bp (141.6) 2QFY2012 766 (232) (30.2) (240) %chg (qoq) 53.4 (91.8) 2,862bp (83.6)

`27 -

3QFY2012 1,176 (19) (1.6) (39)

3QFY2011 830 114 13.7 94

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Airlines 1,205 1.2 52/15 3,711,613 10 17,622 5,335 SPJT.BO SJET@IN

For 3QFY2012, SpiceJets net sales grew by 41.6% yoy to `1,176cr. EBITDA margin came in at negative 1.6%. At the EBITDA level, the company witnessed loss of `19cr. Consequently, the company reported net loss of `39cr during the quarter. We remain Neutral on the stock. Strong top-line growth, while margin declines: For 3QFY2012, SpiceJet reported strong top-line growth of 41.6% yoy on the back of capacity additions during the year. EBITDAR margin declined by 1,451bp yoy to 12.0% and EBITDA margin declined by 1,536bp yoy to negative 1.6%, owing to higher fuel cost during the quarter. The company could not raise ticket prices as much as fuel cost due to stiff completion from FCC players, who were reducing prices to increase load factors and gain market share. The company registered loss of `39cr in 3QFY2012 compared to profit of `94cr in 3QFY2011. Outlook and valuation: SpiceJet currently has a fleet of 32 Boeing aircraft and seven Bombardier aircraft. The company will also add four Bombardier aircraft by the end of FY2012. In FY2013, the company will further add five Boeing aircraft and four Bombardiers. By the end of FY2013, the total tally would be 37 Boeings and 15 Bombardiers, as per the current expansion plans. We expect the companys net sales to post a 35.4% CAGR to `5,384cr over FY201113. Owing to higher ATF prices and intense competition, we have a cautious view on the sector and, thus, remain Neutral on the stock.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 43.6 12.4 5.2 38.9

Abs. (%) Sensex SpiceJet

3m 0.3 11.0

1yr (2.3)

3yr 89.5

(42.7) 100.0

Key financials
Y/E March (` cr) Net Sales % chg Net Profit % chg FDEPS (`) EBITDA Margin (%) P/E (x) P/CEPS (x) RoE (%) P/BV (x) EV/Sales (x) EV/EBITDAR (x)
Source: Company, Angel Research

FY2010 2,181 29.1 61.4 1.5 1.2 10.7 9.6 (1.9) 0.3 1.6

FY2011 2,934 34.5 101.2 64.7 2.5 3.9 10.9 10.1 3.4 0.3 1.8

FY2012E 4,044 37.8 (410.8) (506.2) (9.3) (9.2) 29.1 0.5 10.2

FY2013E 5,384 33.1 (144.8) 64.8 (3.3) (1.0) (11.7) 0.4 3.6

Sharan Lillaney
022 3935 7800 Ext: 6811 sharanb.lillaney@angelbroking.com

Please refer to important disclosures at the end of this report

SpiceJet | 3QFY2012 Result Update

Exhibit 1: 3QFY2012 performance highlights

Particulars (` cr) Net Sales Total Expenditure EBITDA EBITDA Margin (%) EBITDAR EBITDAR Margin (%) Depreciation EBIT Interest Other Income* PBT Tax Minority Interest Net Profit NPM (%) Diluted EPS (`)
Source: Company, Angel Research

3QFY2012 3QFY2011 %chg (yoy) 2QFY2012 %chg (qoq) 1,176 1,194.9 (19) (1.6) 141.0 12.0 12.2 (31.2) 14.3 6.3 (39.3) (39.3) (3.3) (0.9) 830.1 716.1 114 13.7 220.0 2.3 111.7 1.0 7.2 118.0 23.5 94.4 2.1 41.6 66.9 (116.7) (1,536)bp (35.9) 430.2 (127.9) 1,381.5 (12.8) (133.3) (141.6) (141.6) 766.5 998.3 (231.8) (30.2) (94.3) (12.3) 3.7 (235.5) 8.9 4.3 (240.1) (240.1) (31.3) (5.4) 53.4 19.7 (91.8) 2,862bp (249.5) 2,430bp 228.8 (86.8) 61.5 45.4 (83.6) (83.6) 2,798bp (83.6)

26.5 (1,451) bp

11.4 (1,472) bp

Strong top-line growth: For 3QFY2012, SpiceJets net sales grew by 41.6% yoy to `1,176cr (`830cr), driven by strong capacity additions and passenger growth, which increased by 29.2% yoy. On a qoq basis, net sales increased by 53.4%, which was expected as the third quarter is usually the best quarter for the industry. Load factors during the quarter stood at 80.1%, down by 8.8% on a yoy basis.

Exhibit 2: Sales trend

(` cr) 1,400 1,200 1,000 800 600 400 200 0 3QFY2011 4QFY2011 Net Sales (LHS) 1QFY2012 2QFY2012 3QFY2012 Growth qoq Growth yoy 830 759 933 766 1176 (%) 60 50 40 30 20 10 0 (10) (20) (30)

Source: Company, Angel Research

February 7, 2012

SpiceJet | 3QFY2012 Result Update

EBITDA margin declines yoy on higher fuel cost: SpiceJets EBITDA margin declined by 1,536bp yoy to negative 1.6% for the quarter, mainly on account of higher ATF prices during the quarter, which increased to 50.4% as a percentage of sales in 3QFY2012 compared to 37.5% as a percentage of sales in 3QFY2011.

Exhibit 3: OPM declines on the back of higher ATF prices

20 15 10 5 0 (5) (10) (15) (20) (25) (30) (35)
Source: Company, Angel Research

13.7

3QFY2011

4QFY2011 (9.6)

1QFY2012 (8.5)

2QFY2012

3QFY2012 (1.6)

(30.2)

Bottom line declines due margin compression: SpiceJet reported net loss of `39cr in 3QFY2012 compared to profit of `94cr in 3QFY2011, largely due to EBITDA margin compression. Consequently, PAT margin declined to negative 3.3%.

Exhibit 4: Huge yoy decline in NPM

(` cr) 150 100 50 0 (50) (100) (150) (200) (250) (300)
Source: Company, Angel Research
(240.1) 94.4

(%) 15 10 5 0 3QFY2011 4QFY2011

(58.6)

1QFY2012
(72.0)

2QFY2012

3QFY2012
(39.3)

(5) (10) (15) (20) (25) (30) (35)

Net Profit (LHS)

NPM (RHS)

February 7, 2012

SpiceJet | 3QFY2012 Result Update

Exhibit 5: Key assumptions

Estimates (%) Sales growth Load factor EBITDAR margin EBITDA margin Net profit margin
Source: Company, Angel Research

FY2012 37.8 77.0 4.7 (9.2) (10.2)

FY2013 33.1 77.0 11.6 (1.0) (2.7)

Outlook and valuation

SpiceJet currently has a fleet of 32 Boeing aircraft and seven Bombardier aircraft. The company will also add four Bombardier aircraft by the end of FY2012. In FY2013, the company will further add five Boeing aircraft and four Bombardiers. By the end of FY2013, the total tally would be 37 Boeings and 15 Bombardiers, as per the current expansion plans. We expect the companys net sales to post a 35.4% CAGR to `5,384cr over FY201113. Owing to higher ATF prices and intense competition, we have a cautious view on the sector and, thus, remain Neutral on the stock.

February 7, 2012

SpiceJet | 3QFY2012 Result Update

Profit & loss statement

Y/E March (` cr) Gross sales Less: Excise duty Net Sales Other operating income Total operating income % chg Total Expenditure Fuel & Oil Other Mfg costs Personnel Other EBITDA % chg (% of Net Sales) Depreciation& Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Share in profit of Associates Recurring PBT % chg Extraordinary Expense/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) Add: Share of earnings of associate Less: Minority interest (MI) Prior period items PAT after MI (reported) ADJ. PAT % chg 1,689.4 2,181.1 30.5 2,109 945 476 155 173 (419) 66.3 (24.8) 7 (426) 64.1 (25.2) 16 124 (39) (318) 145.0 31 (349) 3 (1.0) (353) (353) (353) 164.1 29.1 2,155 814 512 182 257 26 1.2 8 18 0.8 6 61 83 73 (123.0) 6 68 6 9.4 61 61 61 (117.4) 2,934.4 34.5 2,819 1,226 599 241 324 116 342.6 3.9 9 107 477.8 3.6 5 26 20 128 74.7 2 126 25 19.6 101 101 101 64.7 4,044.5 37.8 4,418 2,262 815 341 437 (373) (422.7) (9.2) 30 (403) (477.8) (10.0) 44 36 (9) (411) (420.5) (411) (411) (411) (411) (506.2) 5,383.6 33.1 5,438 2,695 1,046 445 570 (55) (85.4) (1.0) 58 (113) (72.1) (2.1) 59 27 (19) (145) (64.8) (145) (145) (145) (145) 64.8 FY2009 FY2010 1,689.4 2,181.1 1,689 2,181 FY2011 FY2012E FY2013E 2,934.4 2,934 4,044 4,044 5,384 5,384

February 7, 2012

SpiceJet | 3QFY2012 Result Update

Balance sheet
Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Current Assets Cash Loans & Advances Inventories Debtors Other Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 96 28 68 185 498 308 154 12 12 11 691 (193) 59 263 36 227 165 597 451 113 15 19 893 (296) 96 292 45 247 451 411 192 182 20 17 703 (291) 407 1,392 75 1,317 343 66 209 33 35 833 (490) 827 1,792 133 1,659 380 10 278 44 47 1,106 (727) 932 241 (670) (429) 489 59 242 (584) (342) 438 96 405 (84) 321 86 407 441 (400) 41 786 827 441 1 (545) (103) 1,036 932 FY2009 FY2010 FY2011 FY2012E FY2013E

February 7, 2012

SpiceJet | 3QFY2012 Result Update

Cash flow statement

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Expenses (deferred)/written off Direct taxes paid Cash Flow from Operations Inc./ (Dec.) in Fixed Assets Inc./ (Dec.) in Investments Inc./ (Dec.) in loans and advances Other income/Expense Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2009 FY2010E (318) 7 (179) 3 (493) 304 22 (58) 269 7 (51) (76) (300) 608 308 73 8 178 (32) 6 221 (139) 42 (98) 19 20 143 308 451 FY2011 FY2012E FY2013E 128 9 (52) (8) 25 53 (306) (69) (375) 163 54 (154) 64 (258) 451 192 (411) 30 88 (293) (619) (27) (646) 131 700 (18) 813 (127) 192 66 (145) 58 248 161 (342) (69) (411) 250 (55) 195 (56) 66 10

February 7, 2012

SpiceJet | 3QFY2012 Result Update

Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/E (on basic, reported EPS) P/CEPS P/BV Market cap. / Sales EV/Sales EV/EBITDA EV / Total Assets EV/EBITDAR Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS Book Value Turnover ratios (x) Asset Turnover (Gross Block) Asset Turnover (Net Block) Asset Turnover (Total Assets) Operating Income / Invested Capital Inventory / Sales (days) Receivables (days) Payables (days) Working capital cycle (ex-cash) (days) Solvency ratios (x) Gross debt to equity Net debt to equity Net debt to EBITDA Interest Coverage (EBIT / Interest) (1.1) (0.4) (0.4) (26.6) (1.3) 0.0 (0.5) 3.0 0.3 (0.3) (0.9) 22.1 19.0 17.4 (1.9) (9.3) (10.0) (9.9) (18.8) (1.9) 18.5 25.5 5.4 (11.7) 3 2 139 (119) 12.2 14.8 28.1 (7.2) 2 3 103 (104) 10.6 12.4 11.7 (42.0) 2 2 86 (77) 4.8 5.2 6.6 8.3 2 2 69 (47) 3.4 3.6 6.1 6.4 3 3 64 (44) (14.6) (14.6) (14.3) (17.8) 2.5 1.5 2.9 (14.1) 2.5 2.5 2.7 7.9 (9.3) (9.3) (8.6) 0.9 (3.3) (3.3) (2.0) (2.3) 0.4 0.5 (2.0) 14.1 (13.9) 18.0 10.7 9.6 (1.9) 0.3 0.3 24.8 6.7 1.6 10.9 10.9 10.1 3.4 0.4 0.3 8.6 2.5 1.8 29.1 0.3 0.5 (5.2) 2.3 10.2 (11.7) 0.2 0.4 (40.9) 2.4 3.6 FY2009 FY2010 FY2011E FY2012E FY2013E

February 7, 2012

SpiceJet | 3QFY2012 Result Update

Research Team Tel: 022 3935 7800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

SpiceJet No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns) :

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

February 7, 2012