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.
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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.