Shares of InterGlobe Aviation witnessed high volatility on Monday following announcement that Aditya Ghosh will step down as IndiGo president. Shares of the airline ended marginally lower by 0.55 per cent at Rs 1,400 apiece at the National Stock Exchange (NSE) after hitting an intra-day low of Rs 1,360 and a high of Rs 1,443.45.
The stock market overall, however, continued its winning run for a third straight session, with the Sensex rising 191 points to a near three-month high of 35,160, led by intense buying mainly in banking and information technology stocks amid positive global cues and high optimism on corporate earnings. The Nifty gained over 47 points to breach the psychological 10,700-level.
India’s largest airline IndiGo last Friday announced changes in its top management with president and wholetime director Ghosh resigning effectively July 31 and April 26, respectively. IndiGo’s communications chief Ajay Jasra also resigned from his post. In the interim, the airline’s promoter Rahul Bhatia took charge as the chief executive officer, while the company will consider appointing former senior executive Gregory Taylor as CEO.
Ghosh’s resignation has come at a time when the budget carrier was embroiled primarily in two issues — one pertaining to the glitches with Pratt & Whitney engines on board its Airbus A320neo flight, a problem that has lasted for more than a year leading to non-optimal fleet utilisation and mass flight cancellations; and two about recurrent cases of airline’s staff misbehaving with passengers going public.
Taylor was the executive vice president of revenue management and network planning at IndiGo during 2016 and 2017. Prior to that he held various management roles at United Airlines and US Airways in the areas of corporate planning, strategy, network planning, fleet planning, finance, cost management and airline express operations.
With Ghosh at the helm of affairs in the last ten years, IndiGo has seen itself rise to become the market leader in Indian domestic aviation market taking over legacy airlines such as Jet Airways and Air India, while competing with a number of other low-cost carriers such as SpiceJet and GoAir. During the month of March, IndiGo had a market share of 39.5 per cent.
Meanwhile, shares of Reliance Industries Ltd (RIL) declined 3.18 per cent on Monday, the first trading session after its quarterly results were declared, over concerns about valuations and the less-than-satisfactory performance of its telecom arm Reliance Jio.
The stock ended the session at Rs 963.10 on the BSE, and was the second-worst performing Sensex stock on Monday. RIL has posted a net profit of Rs 9,459 crore for the quarter ended March 31, 2018, a growth of 17.5 per cent over same period in the last year.
For Reliance, “gross refining margins came under pressure at $11/barrel vs $11.60 / barrel on a quarter-on-quarter (q-o-q) basis. This is due to the cyclical nature of the business. Further lower volumes of upstream oil & gas will continue to put pressure on the future as well,” said an analyst requesting anonymity.
“For the Reliance Jio business, the jump in subscriber base was 23.25 per cent, while revenue from operations grew barely by 3.6 per cent q-o-q basis. In the last one year stock has moved up by almost 40 per cent, which reflects stretched valuations with the market building up too much expectation from the Jio business,” the analyst added. Kotak Institutional Equities, in its note, said elevated capex, still large capital-WIP, high effective debt and Jio’s balance sheet took the sheen away from RIL’s remarkable 17 per cent growth in EPS to Rs 59 in FY2018. “We expect the growth trajectory to slow down from exit-quarter EPS of 2016 until Jio picks up, given (1) near full utilisation of petchem projects, (2) limited upside to downstream margins and (3) likely subdued contribution from gasifiers”.