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HSBC has downgraded its recommendation for SpiceJet to “Reduce,” slashing its target price from ₹40 to ₹26.
The brokerage firm cites the airline’s plans to raise ₹3,000 crore through a Qualified Institutional Placement but expresses concerns that the funds may be used to cover ongoing losses and working capital needs, given the current lack of aircraft.
HSBC also points out the lack of visibility on capacity growth and profitability, coupled with the airline’s substantial debt and a mere 3 per cent market share. The brokerage believes that SpiceJet’s current valuation remains too expensive in light of these challenges.
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