Short-Term Price Movement and Market Outperformance
SpiceJet’s recent price action has been characterised by a three-day consecutive gain, during which the stock has appreciated by 13.09%. On the day in question, the share touched an intraday high of ₹34.99, representing a 7.66% increase from the previous close. This performance notably outpaced the sector by 4.63%, signalling a temporary shift in investor sentiment favouring the airline.
Additionally, the stock’s current price is trading above its 5-day, 20-day, and 50-day moving averages, indicating short-term technical strength. However, it remains below the 100-day and 200-day moving averages, suggesting that longer-term trends have yet to turn decisively positive. The weighted average price data reveals that a larger volume of shares traded closer to the day’s low price, which may indicate some caution among participants despite the overall upward movement.
Investor participation has surged, with delivery volumes reaching 2.16 crore shares on 31 March, a remarkable 429.69% increase compared to the five-day average. This heightened liquidity supports the stock’s ability to absorb larger trade sizes, with a trading capacity of approximately ₹1.24 crore based on 2% of the five-day average traded value.
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Long-Term Fundamentals and Financial Performance
Despite the recent price uptick, SpiceJet’s long-term financial health remains weak. The company reports a negative book value, signalling that liabilities exceed assets, which undermines its fundamental strength. Over the past five years, net sales have declined at an annualised rate of 10.67%, while operating profit has stagnated at zero growth, reflecting persistent operational challenges.
SpiceJet’s debt profile is concerning, with an average debt-to-equity ratio of zero, which may indicate reliance on non-equity financing or accounting nuances, but overall points to financial fragility. The company has reported negative results for two consecutive quarters, with profit before tax (excluding other income) plummeting by 79.1% to a loss of ₹664.38 crore compared to the previous four-quarter average.
Net sales for the latest six-month period stood at ₹1,912.62 crore, down 27.09%, while the net loss after tax widened to ₹855.14 crore, also declining by 27.09%. These figures highlight ongoing revenue contraction and mounting losses, which have contributed to the stock’s poor performance over the past year.
Indeed, SpiceJet’s stock has underperformed significantly relative to the broader market. While the Sensex has delivered a 3.87% return over the last year, SpiceJet’s shares have fallen by 43.30%. Year-to-date, the stock is down 38.07%, contrasting sharply with the Sensex’s 8.35% gain. Over three and five years, the stock has declined by 14.44% and 63.42% respectively, while the Sensex has surged by 36.16% and 83.64% in the same periods.
The company’s negative EBITDA and shrinking profits, which have fallen by 4.6% over the past year, further underscore the risks associated with holding the stock. This risk profile is reflected in the stock’s valuation, which is considered elevated relative to its historical averages, adding to investor caution.
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Conclusion: Temporary Rally Amid Structural Challenges
In summary, SpiceJet’s recent share price rise on 09-Dec reflects a short-term rebound driven by increased investor participation and technical momentum. However, the company’s weak long-term fundamentals, including declining sales, consecutive quarterly losses, and negative book value, continue to weigh heavily on its outlook. The stock’s persistent underperformance relative to the Sensex and sector benchmarks highlights the structural challenges facing the airline.
Investors should weigh the current positive price action against the backdrop of these fundamental headwinds. While the stock’s liquidity and recent gains may offer trading opportunities, the underlying financial risks suggest caution for those considering a longer-term investment in SpiceJet.
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