The news of Kalanithi Maran, promoter of media group Sun TV Network Ltd, hiking stake in SpiceJet Ltd to 43 percent by October has rubbed off on the stock. The shares of SpiceJet moved in the upper circuit on Tuesday, rising 7 percent to Rs 25.60 on the Bombay Stock Exchange (BSE). With the stake increase, one thing is clear: the low-cost airline is headed for a funds mop-up to the tune of about Rs 130 crore, which it badly needs.
SpiceJet clocked a profit of Rs 101.16 crore in 2010-11, the only listed Indian carrier to do so that fiscal year, but has since lost ground. Reuters
Neil Mills, CEO of the airline told CNBC-TV 18, in an interview that the infusion and stake increase will be effected through the issue of convertible preference shares at a premium of 50 percent to the current share price of Rs 24. Mills added that Maran hiking stake in the airline shows the promoter confidence in the business model of the airline which is fast expanding its network in smaller cities across India.
SpiceJet clocked a profit of Rs 101.16 crore in 2010-11, the only listed Indian carrier to do so that fiscal year, but has since lost ground, because of costlier fuel and intense competition. The company lost Rs 71.96 crore in the three months to 30 June compared with a net profit of Rs 55.21 crore in the year-ago period.
The state of the business has also affected the fund-raising plans of other airlines.
Watch video: Maran to hike stake in SpiceJet, stock flies 7% higher