A day after the promoter group of Jet Airways decided to reorganise the shareholding structure of the company as a precursor to the Rs 2,058-crore deal with Etihad, the stock of Jet Airways moved up about two per cent to close at Rs 621.35 on the BSE on Tuesday.

According to analysts, the deal is expected to boost the stock’s prospects in the medium-term. Most brokerages have revised the stock rating to ‘buy’.

“The partnership with Etihad will expand the international operations of Jet significantly. Its interest outgo will reduce. We expect the target price of the stock to be in the range of Rs 600 to Rs 650 with minimal downside risk,” said Sharan Lillaney, aviation analyst, Angel Broking.

In a filing with the exchange on Monday, Jet said its holding company Tail Winds will offload a small part of its 79.99 per cent stake (6.9 crore shares) in the market to meet SEBI’s minimum public shareholding norms of 25 per cent.

The promoter group entity will transfer the remaining shares to its promoter and Chairman Naresh Goyal. Currently, Goyal holds a 0.01 per cent stake in Jet Airways. After the stake-sale to Etihad (which will see fresh shares being issued), Goyal will hold nearly 5.8 crore shares that translates into a 51 per cent stake in the airline valued at about Rs 3,598 crore (based on Tuesday’s closing price).

Kotak recommends sell

Taking a contrarian call from other brokerages, Kotak Institutional Equities has recommended investors to sell.

“In our view, the price paid by Etihad cannot be justified purely by fundamentals of the company. There is a lot of value attached to incremental bilateral rights and strategic premium for a large stake in the company. Hence, the deal represents an attractive exit for investors. We see no upside from the current levels for the next 2-3 years, as from here stock price would be determined by operational performance where we are not expecting a dramatic improvement” said the report.

nivedita.ganguly@thehindu.co.in

manisha.jha@thehindu.co.in

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