SpiceJet Ltd is Rated Strong Sell

Understanding the Current Rating

The Strong Sell rating assigned to SpiceJet Ltd indicates a cautious stance for investors, signalling significant risks and challenges facing the company. This rating is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the stock’s investment potential and risk profile.

Quality Assessment

As of 24 February 2026, SpiceJet’s quality grade remains below average, reflecting weak long-term fundamental strength. The company’s net sales have declined at an annual rate of -4.89% over the past five years, while operating profit has stagnated at 0%. This lack of growth highlights operational challenges and an inability to expand revenue streams effectively. Additionally, the company carries a negative book value, which is a significant red flag for investors as it suggests liabilities exceed assets on the balance sheet.

Moreover, SpiceJet’s debt profile is concerning. Despite an average debt-to-equity ratio of zero, the company is classified as highly leveraged due to its negative equity position and high promoter share pledging. Currently, 47.69% of promoter shares are pledged, which can exert additional downward pressure on the stock price during market downturns, increasing investor risk.

Valuation Considerations

The valuation grade for SpiceJet is categorised as risky. The stock is trading at levels that are unfavourable compared to its historical averages, reflecting market scepticism about the company’s future prospects. Over the past year, the stock has delivered a return of -67.52%, underscoring significant investor losses. This steep decline in share price is compounded by a dramatic fall in profits, with net earnings decreasing by -396.7% over the same period.

Such valuation metrics suggest that the market perceives the stock as overvalued relative to its earnings potential and financial health, making it a precarious investment choice at present.

Financial Trend Analysis

The financial trend for SpiceJet is decidedly negative. The company has reported losses for three consecutive quarters, with the latest quarterly PAT (Profit After Tax) at Rs -241.57 crores, representing a sharp decline of -96.1% compared to the previous four-quarter average. Return on Capital Employed (ROCE) for the half-year period stands at a low -18.29%, indicating poor capital efficiency and profitability.

Inventory turnover ratio, a measure of operational efficiency, is also at a low 24.91 times for the half-year, signalling potential issues in managing stock and operational cycles. These metrics collectively point to deteriorating financial health and operational challenges that weigh heavily on the company’s outlook.

Technical Outlook

From a technical perspective, SpiceJet’s stock is bearish. The share price has experienced consistent declines across multiple time frames: a 3.34% drop in the last day, -9.78% over the past week, and a staggering -52.30% over three months. The six-month and year-to-date returns are equally dismal at -57.01% and -48.49%, respectively.

Such sustained downward momentum reflects weak investor sentiment and technical indicators that suggest further downside risk. The stock’s performance has also lagged behind the broader BSE500 index over the last three years, one year, and three months, highlighting its underperformance relative to the market.

Implications for Investors

For investors, the Strong Sell rating on SpiceJet Ltd serves as a cautionary signal. It suggests that the stock currently carries elevated risks due to poor financial health, unfavourable valuation, negative earnings trends, and weak technical indicators. Investors should carefully consider these factors before initiating or maintaining positions in the stock.

While the airline sector can be cyclical and sensitive to external factors such as fuel prices and economic conditions, SpiceJet’s current fundamentals indicate structural challenges that may take considerable time to resolve. The high level of promoter share pledging further adds to the risk profile, as it may lead to forced selling in adverse market conditions.

Summary

In summary, SpiceJet Ltd’s current Strong Sell rating reflects a combination of below-average quality, risky valuation, negative financial trends, and bearish technical signals. The company’s ongoing losses, declining sales, and operational inefficiencies present significant headwinds. Investors should approach the stock with caution, recognising the elevated risks and the potential for continued volatility.

While the airline industry may offer opportunities in the long term, SpiceJet’s present fundamentals suggest that it is not a favourable investment at this time. Monitoring future quarterly results and any strategic initiatives by the company will be essential for reassessing its outlook.

About MarketsMOJO Ratings

MarketsMOJO’s ratings are designed to provide investors with a clear, data-driven assessment of stocks based on multiple dimensions of company performance. The Strong Sell rating indicates that the stock is expected to underperform the market and carries significant downside risk. This rating is intended to help investors make informed decisions by highlighting stocks with challenging fundamentals and technical outlooks.

Key Metrics at a Glance (As of 24 February 2026)

• Mojo Score: 3.0 (Strong Sell)
• 1-Day Return: -3.34%
• 1-Week Return: -9.78%
• 1-Month Return: -33.13%
• 3-Month Return: -52.30%
• 6-Month Return: -57.01%
• Year-to-Date Return: -48.49%
• 1-Year Return: -67.52%
• ROCE (Half Year): -18.29%
• PAT (Quarterly): Rs -241.57 crores
• Inventory Turnover Ratio (Half Year): 24.91 times
• Promoter Shares Pledged: 47.69%

These figures underscore the challenges facing SpiceJet and reinforce the rationale behind the current rating.

Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today