The shares of SpiceJet Limited lurched lower on Wednesday, declining 7% to hit their 52-week low of ₹35 apiece on the Bombay Stock Exchange (BSE). This happened due to multiple instances of its planes suffering technical glitches in the past few weeks.
The shares closed at ₹ 37.65 on Tuesday and opened at ₹37.10 apiece on Wednesday, down 2.33%, a day after its Delhi-Dubai Boeing 737 Max aircraft was diverted to Karachi due to a mid-air malfunctioning in its fuel indicator.
In another incident, cracks had developed on the windshield of its Kandla-Mumbai flight that was at a height of 23,000 feet, forcing a priority landing at Mumbai airport. In the past 17 days, the total number of technical malfunction incidents involving SpiceJet aircraft has gone up to seven.
Last weekend, its Jabalpur-bound flight made an emergency landing in Delhi after smoke was noticed in the aircraft cabin. The Directorate General of Civil Aviation (DGCA) is investigating all seven incidents.
“In the past 6 months, investors have lost nearly 50 per cent in Spicejet. Given the current scenario with high crude prices, it is not advisable to invest in any airline stock as the profitability of the sector will take at least a year,” said Ravi Singh, Vice President and Head of Research at Share India Securities.
He added that the company has suffered steep losses and recovering will take a lot of time. He said that the current scenario with high fuel prices makes the situation worse for the struggling budget airline. With the presence of Indigo (InterGlobe Aviation) which is a market leader, and the entry of Rakesh Jhunjhunwala-backed Akasa Air along with Tata-owned Air India, Air Asia and Vistara group, it is likely that there will be price wars to win customers which can also impact the earnings of the company.
The broader market was in the positive territory and the benchmark Sensex rose nearly 424 points to 53,559 points.
Written By – Simran Bafna
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