IPO fast?

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By TESTCustomwebLP TESTCustomwebLP October 8, 2014 19:20

IPO fast?

They may be waiting to see what happens to the Bangkok Airways IPO, which is priced at the higher end of expectations but they should not wait too long. IndiGo, the most profitable carrier in India, has seen profits more than halve due to FX losses and the huge price ongoing price war raging in the country at this time.

IndiGo posted a net profit of Rs 317 crore for the twelve months ended March 31, 2014 from an Rs 787 crore profit for 2013FY. Revenue rose 18% to Rs 11,117 crore for 2014FY from Rs 9,458 crore in FY13. IndiGo’s CEO and president Aditya Ghosh confirmed the airline has filed results with the registrar of companies.

Given that SpiceJet fell to a record net loss of over Rs 1,003 crore for FY14 while Jet Airways lost Rs 3,667 crore, the IndiGo result is not a bad one by any means and the fact that revenue is up 18% will provide great comfort to executives. Although potential investors will see the main risk factor to the airline going forward to be FX and may well demand a plan to increase international operations to try and off-set the fuel, pilot and leasing costs that cause US Dollar exposure to amount to some 70% of the cost base while around 90% of income remains in Rupees.

IndiGo passenger numbers were up 16% year on year to 19.57m while capacity increased by 20% or eleven aircraft from 66 to 77. As things stand IndiGo will have to slow capacity growth more sharply than has to date been suggested, especially given that AirAsia India and the SIA/Tata JV will both run full competition during 2014/15 year of account.

IndiGo’s revenue per average seat kilometre for the year fell to 3.70 from 3.78 in 2013 – a sign that the price war with SpiceJet and Air India has taken its toll.

One cannot help but think that IndiGo has an IPO window in the here and now and a launch before the end of 2014 is becoming more and more essential. Bangkok Airways (see story below) may well prove to be a pathfinder for IndiGo in the APAC IPO race.

IndiGo has appointed seven banks Citigroup, Deutsche Bank, JP Morgan, UBS, Standard Chartered, Morgan Stanley and Kotak Mahindra.

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By TESTCustomwebLP TESTCustomwebLP October 8, 2014 19:20