ICICI direct's report on Jet AirwaysJet Airways’ performance during the quarter improved significantly aided by strong growth in passenger traffic (domestic 35% YoY, international up 9.5% YoY) coupled with a sharp fall in ATF prices (down 33% YoY). Average fares were down 15.5% YoY, also helping in growth of passenger traffic. Overall, Jet managed to clock revenue growth of 8.4% YoY to Rs 5707.1 crore (above I-direct estimate:Rs 55618.8 crore)With a sharp fall in ATF prices, the company reported an EBITDA of Rs 506.7 crore vs. loss of Rs 82.2 crore last year. This quarter witnessed the full benefit of ATF price fall, which has further fallen 8.8% during July-September 2015 from average of Q1FY16, boding well forfurther margin expansion, going forward An exceptional loss of Rs 45.6 crore for the quarter pertains to diminution in value of investments towards JetLite. Adjusting for that, the company reported net profit of Rs 80.1 crore for the quarterValuationGiven the improving macro factors like healthy passenger traffic growth (up over 32% YoY) coupled with lower ATF prices (28% of revenues), we expect the company to report healthy revenue growth along with better margins during the period FY15-17E. Hence, we remain positive on the company and maintain our target price of Rs 441/share (i.e. valuing at 0.6x FY17E EV/sales) with BUY recommendation on the stock, says ICICI direct research report.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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