Kingfisher Airlines Ltd is the largest charter aviation company in India. Their principal activity is to provide commercial passenger airline and private helicopter and airplane chartering services in India. Their business unit Air Deccan, is India's low cost carrier.
Kingfisher Airlines Ltd was incorporated in June 15, 1995 as a private limited company with the name Deccan Aviation. The company was promoted by G R Gobinath, K J Samuel and Vishnu Singh Rawal. In January 2005, the company was converted into a public limited company.
In September 1997, the company opened their first base at Jakkur and launched their first Helicopter. In June 1998, they opened their second base in Hyderabad and in December 1998, they commenced offshore flying operations. In June 2001, the company introduced first fixed wing aircraft and in November, they introduced the second fixed wing aircraft.
In August 2003, first Air Deccan flights take place on Bangalore to Hubli and Bangalore to Mangalore. In December 2003, the company incorporated Deccan Aviation (Lanka) Pvt Ltd, which is a joint venture company. The company was established as a 52% subsidiary company to undertake helicopter services and airline operations in Sri Lanka. In August 2004, they introduced first Airbus A 320. In March 2005, Air Deccan, entered into tie up arrangement with Club HP.
In June 27, 2005, Deccan Aviation (Lanka) Pvt Ltd ceased to be a subsidiary consequent to the transfer of 4% of their share to Srilanka nationals. In March 2007, they forayed into Air Cargo Business through a wholly owned subsidiary. The company hived off Charter Services into a separate entity and also transfers the Maintenance and Repair Facility into a separate entity.
The Airline business of Kingfisher Airlines Ltd merged with the company with effect from April 1, 2008 and the name of the company was changed to Kingfisher Airlines Ltd.
Kingfisher Airlines' fleet mainly consists of ATR 42, ATR 72 and Airbus A320 family aircraft for domestic and short haul services and Airbus A330-200s for international long-haul services. The average age of its fleet as of January 2009 was 2.3 years. All ATR's and a few aircraft from the A320 family were used for Kingfisher Red service.
Up until March 2011, Kingfisher Airlines had the following fleet:
Kingfisher Airlines Fleet
Aircraft
Total
Orders
Options
Passengers
P
Y
Total
Airbus A319-100
3
-
-
0
144
144
Airbus A320-200
10
67
-
20
114
134
3
0
174
174
8
0
180
180
Airbus A321-200
6
-
-
32
119
151
2
0
199
199
Airbus A330-200
4
15
-
30
187
217
Airbus A350-800
-
5
-
TBA
Airbus A380-800
-
5
5
0
0
800
ATR 42-500
2
-
-
0
48
48
ATR 72-500
17
-
20
0
66
66
8
0
72
72
Total
63
92
25
Spicejet - Inception and History
SpiceJet Ltd is India's best low cost airline, delivering the lowest air fares with the highest consumer value. The company operates 119 flights daily to 18 cities, namely Ahmedabad, Bangalore, Bagdogra, Chennai, Coimbatore, Delhi, Guwahati, Goa, Hyderabad, Jammu, Jaipur, Kochi, Kolkata, Mumbai, Pune, Srinagar, Varanasi and Visakhapatnam.
Spicejet Ltd was incorporated in the year 1984 with the name Genius Leasing Finance and Investment Company Ltd. In the year 1993, the company ventured into domestic aviation operations under technical partnership with Deutsche Lufthansa AG. In the year 1994, the name of the company was changed from MG Express to ModiLuft Ltd.
In June 1994, the company entered into a management agreement with Lufthansa to manage their entire Airline operations. The company suspended their Airline operations in the year 1996 after dissensions grew between Lufthansa and the company. During the year 2000-01, the name of the company was changed from ModiLuft Ltd to Royal Airways Ltd.
The company started their commercial operations of domestic flight services on May 23, 2005 with three leased Boeing 737-800 aircraft. During the year 2004-05, they signed an agreement with Boeing for acquiring 20 (737-800) aircrafts and in May 4, 2005, the company changed the name of the company from Royal Airways Ltd to SpiceJet Ltd. In May 5, 2005, they entered into a strategic tie up with Indian Oil Corporation Ltd.
During the year 2005-06, the company integrated with various travel related website like Indiatimes, makemytrip, travelguru and cleartrip to boost their sales through internet. They also entered into a sale and lease back agreement with Bacock & Brown Aircraft Management along with its long-term strategic partner Normura Babcock & Brown Co Ltd covering sixteen brand new Boeing 737-800/-900ER aircraft valued at over USD 1.1 billion based on the manufacturer's list prices.
In November 2005, the company launched their daily direct flights between Delhi and Kolkata. They also launched their services to two new spice cities namely, Jammu and Srinagar. In March 27, 2006, the company launched their first co-branded credit card with State Bank of India in association with MasterCard International.
During the year 2006-07, the company inducted five new aircraft to their fleet taking the total fleet strength to eleven aircraft. They started sale of food on board during the year. In August 17, 2006, the company launched Spicejet Hotels, with the aim of providing a dedicated online Web hotel reservation services to their customers. In October 2006, they launched new flights between Kolkata and Guwahati. In January 2007, they introduced two new additional daily flights on the Bangalore - Mumbai - Hyderabad routes.
During the year 2007-08, the inducted eight new aircraft to their fleet taking the total fleet strength to nineteen aircraft. Out of eight, two were Boeing 737-900, the largest capacity domestic aircraft having seating capacity of 212 passengers. In May 2007, the company made a tie up with Tata AIG General Insurance to cover travel related risks of the airlines' domestic passengers. The insurance cover would be provided for accidental death, emergency medical treatment, trip cancellation, baggage loss, flight delays and trip interruption.
In October 2007, the company signed an agreement with Air India for the wet lease of two of the Company's Boeing 737-800 aircrafts, for operating daily flights between Lucknow, Varanasi, Jaipur and Nagpur & Jeddah. In January 2008, the company made a tie up with BillDesk, which provides the SpiceJet customers an additional option to purchase and pay for their tickets, through their Internet Banking Accounts Online.
Up until March 2011, Spicejet had the following fleet:
SpiceJet fleet
Aircraft
In Service
Orders
Options
Passengers
(Economy)
Boeing 737-800
29
20
-
189
Boeing 737-900ER
6
-
-
212
Bombardier Dash 8 Q400
12
3
15
78
Total
47
23
15
Financial Analysis
Various ratios are used by managers and investors to analyze and forecast the profitability and efficiency of a company. Listed in this section are the ratios used for the financial analysis of Kingfisher Airlines and Spicejet.
Short Term Liquidity Ratios for Kingfisher Airlines and Spicejet.
Objective
To measure the solvency, or the ability, of Kingfisher Airlines and Spicejet to meet its short-term financial obligations and to assess the liquidity, or their ability, to convert current assets to cash to reduce current liabilities.
The Ratios
The most widely used financial ratios for establishing the short-term liquidity of a company are
highlighted in the below chart.
Financial Ratio
Numerator
Denominator
Current Ratio
Current Assets
Current Liabilities
Quick Ratio
Cash + Cash Equivalents + Accounts Receivable
Current Liabilities
Inventory Turnover
Cost of goods sold
Average inventory at cost
The short-term liquidity ratios are used in the evaluation of short-term liquidity to convert current assets into cash in order to reduce the financial obligations of the company as they become due. These ratios are particularly significant to the creditors and potential lenders of a company because they determine the ability of that company to meet current payments of a debt. However, investors and stockholders are also interested in the company's definition of current assets and current liabilities since these
classifications have a direct impact on the amount of available working capital of an entity. As a general
rule of thumb, a current ratio of 2:1 and a quick ratio of 1:1 are considered to be acceptable.
Other ratios commonly used to evaluate short-term liquidity are average collection period in days and inventory turnover. The main focus of these ratios is to evaluate how soon accounts receivable will be collected and how soon inventory will be sold. Collection period is a key measure of accounts receivable quality. Increases in the average collection period of receivables may indicate increases in acceptance of poor credit risks or less energetic collection efforts. Inventory turnover measures how
quickly inventory is sold. Decrease in inventory turnover may indicate problems such as slower-moving merchandise or a worsening coordination of buying and selling functions.
As with all financial ratios, the industry practices and the company's management and operating practices need to be taken into account during the analysis.
Quick Comparison - Kingfisher Airlines
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Jun'
2007
Current Ratio
1.17
0.91
0.89
1.61
1.44
Quick Ratio
0.61
0.57
0.52
0.87
1.20
Inventory
Turnover
34.21
31.82
53.49
34.86
27.29
Quick Comparison - Spicejet
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Current Ratio
0.63
0.68
0.8
0.79
0.73
Quick Ratio
0.55
0.65
0.71
0.69
0.68
Inventory
Turnover
153.86
147.62
130.16
120.52
111.8
Quick Comparison - Industry Average
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Current Ratio
0.81
0.84
0.99
1.13
1.18
Quick Ratio
0.52
0.59
0.65
0.95
0.82
Inventory
Turnover
27.24
26.14
18.39
19.53
13.11
The airline industry is a debt intensive industry due to the significant amounts of debt incurred in the financing (either leases or purchases) of aircraft necessary for operations. The current and quick ratios can be dramatically affected as the number of aircraft leases or debt obligations move into the current liabilities section of the balance sheet. Additionally, as an airline expands operations and service to new cities, it incurs additional liabilities in the form of gate and ticket counter leases at the new airport destinations.
Analysis
As shown in the above comparative table, Kingfisher Airlines' and Spicejet's short-term liquidity has varied over the past five years and has consistently remained below a 2:1 ratio, which could be perceived as less than optimal. The quick ratio for both airlines has remained under 1:1 (with the exception of 2007 for Kingfisher Airlines), which is considered to be the benchmark value for this ratio. However, relative to the Indian airline industry, Kingfisher Airlines has maintained a higher than average current ratio (with the exception of fiscal year 2009) but its quick ratio has remained lesser than the industry for three out of the past five years. While, Spicejet has maintained a lower than average current ratio but its quick ratio has remained higher than the industry for three out of the past five years. These trends indicate Kingfisher has not been in a better position than its competition to meet its short-term financial obligations whereas Spicejet has been in a better position.
Both, Kingfishers' and Spicejet's inventory turnover is relatively high as compared to the industry average.
Long Term Solvency Ratios for Kingfisher Airlines and Spicejet
Objective
To apply ratio analysis to assess the debt levels of Kingfisher Airlines and Spicejet.
The Ratios
The most commonly used ratios by financial analysts for determining the long- term solvency of an entity are shown in the following table:
Financial Ratio
Numerator
Denominator
Debt-to-Equity
Total Debt
Total Shareholder's Equity
Interest Coverage
PBDIT
Interest
These ratios are used for solvency evaluation. The main focus of these ratios is the entity's ability to repay long-term creditors. Both creditors and shareholders are equally interested in these ratios. Typically, these ratios should be as low as possible. These ratios indicate the entity's ability to withstand relatively sour business conditions without suffering net losses or insolvency. Although, these ratios should not be taken at face value since they are dependent on many factors, these ratios are most useful for making similar comparisons in the industry.
Quick Comparison - Kingfisher Airlines
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Debt-to-Equity
6.72
21.83
15.61
6.88
6.77
Interest Coverage
-0.16
-0.87
-1.77
-7.76
-10.29
Quick Comparison - Spicejet
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Debt-to-Equity
0.21
1.81
2.03
2.21
1.80
Interest Coverage
12.24
6.96
-20.8
-11.67
-25.81
Quick Comparison - Industry Average
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Debt-to-Equity
3.78
3.88
2.62
2.07
1.59
Interest Coverage
0.8
0.37
-0.89
-2.16
0.17
Analysis
As evident from the above table and as expected from a high capital industry, the Debt-to-Equity Ratios of Kingfisher, Spicejet and Industry Average are high. The Debt-to-Equity Ratio of Spicejet has reduced and is well below the industry aggregate, while the ratio of Kingfisher Airlines is very high compared to the industry average.
The Interest coverage ratio of Kingfisher has been low compared to the industry average while that of Spicejet has been improving and is very high as on 2011. Even if the Debt-to-Equity ratio is high, a high Interest Coverage ratio can reduce the risk involved in the company incurring net losses or insolvency.
The comparative analysis shows decreasing stability of Kingfisher Airlines vis-à-vis increasing stability of Spicejet to meet its long-term obligations successfully without being in danger of encountering net losses or insolvency.
Profitability Ratios for Kingfisher Airlines and Spicejet
Objective
To determine the profitability of Kingfisher Airlines and Spicejet using various financial ratios.
The Ratios
Profitability ratios are used in an effort to evaluate management's ability to monitor and control expenses and to earn a profit on resources committed to the business. The ratios assess Spicejet's and Kingfisher Airlines' strengths and weaknesses, operating results and growth potential. These ratios are used to measure how efficiently the assets are being used to generate net income and sales. The higher the ratio, the more effectively a company is using their assets. The ratios also allow comparison of the profitability of Kingfisher Airlines and Spicejet to that of similar airlines within the industry.
Listed in the table below are the seven primary ratios used to determine profitability.
Financial Ratio
Numerator
Denominator
Gross Profit
Sales - Cost of Goods Sold
N/A
Gross Profit Percentage
Gross Profit
Sales Revenue
Return on Sales
Net Income
Sales Revenue
Return on Stockholder's
Equity
Net Income
Average Stockholder's Equity
Asset Turnover
Sales
Average Total Assets Available
Pretax Return on Operating
Assets
Operating Income
Average Total Assets Available
Earnings Per Share
Net Income - Dividends on preferred stock, if any
Average Common Shares
Outstanding
Quick Comparison - Kingfisher Airlines
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Gross Profit
3,914.67
3,186.68
2,629.77
550.55
642.63
Gross Profit Percentage
63.19
63.77
50.20
38.20
39.62
Return on Sales
-0.25
-0.48
-0.41
-0.47
-0.25
Return on Stockholder's Equity
-1.45
-6.66
-5.94
-5.03
-3.07
Asset Turnover
1.51
1.23
1.48
1.28
1.26
Pretax Return on Operating Assets
0.00
-0.28
-0.35
-0.52
-0.26
Earnings Per Share
-14.47
-66.63
-59.39
-50.26
-30.72
Quick Comparison - Spicejet
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Gross Profit
1,650.97
1,364.50
742.22
590.75
294.36
Gross Profit Percentage
57.34
62.56
43.93
45.62
45.72
Return on Sales
0.04
0.03
-0.21
-0.10
-0.11
Return on Stockholder's Equity
0.25
0.25
-1.46
-0.55
-0.29
Asset Turnover
7.08
23.15
28.46
2.31
1.04
Pretax Return on Operating Assets
0.36
0.92
-5.49
-0.20
-0.10
Earnings Per Share
2.50
2.54
-14.63
-5.55
-2.94
Quick Comparison - Industry Average
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Gross Profit
23,811.45
21,280.00
15,976.17
18,998.48
14,341.68
Gross Profit Percentage
73.31
76.15
64.06
61.18
64.84
Return on Sales
0.01
-0.04
-0.08
-0.07
-0.02
Return on Stockholder's Equity
0.07
-0.26
-0.50
-1.08
-0.25
Asset Turnover
0.76
0.59
0.60
0.63
0.94
Pretax Return on Operating Assets
0.14
0.08
0.02
0.01
0.09
Earnings Per Share
0.66
-2.55
-5.01
-10.82
-2.45
Analysis
Gross profit and gross profit percentage are used to assess whether the profits will cover operating expenses. Kingfisher Airlines and Spicejet have relatively low gross profit rate, primarily because of high operating costs.
Return on sales discloses the profits earned and measures the efficiency of the company. For Kingfisher Airlines the return on sales is consistently below the industry average vis-à-vis Spicejet, whose return on sales has been increasing and is above industry average for past two years.
Return on stockholder's equity assesses the effective use of resources provided by stockholders. This measure of performance is one of the key profitability ratios. For Kingfisher Airlines the return on equity has been consistently below the industry average, vis-à-vis Spicejet, which has had a significant increase since 2010.
The higher the ratio for asset turnover, the more effective the company is using its assets to produce sales. It appears that both Kingfisher Airlines and Spicejet are reasonably using their assets. They have excess turnover, which would signal the company is strapped for cash. Like Asset Turnover, the higher the number of the Pretax Return on Operating Income, the better the company is doing using their assets to produce operating income. As seen in the table above, Kingfisher Airlines is consistently below the industry aggregate vis-à-vis Spicejet which has had a significant increase since 2010. Hence Spicejet is doing a better job of using its assets to produce operating income.
The most popular profitability ratio is Earnings Per Share (EPS). Earnings per share gives a picture of the current net income in a particular period to the number of outstanding shares of stock. Kingfisher Airlines' earnings per share has steadily increased over the past five years but is significantly below the industry average. Spicejet on the other hand has achieved a higher EPS than the industry aggregate since 2010.
Market Price and Dividend Ratios for Kingfisher Airlines and Spicejet
Objective
To apply ratio analysis to determine the return on investment for Kingfisher Airlines and Spicejet.
The Ratios
The following are the most commonly used ratios in determining the return on investment:
Financial Ratios
Numerator
Denominator
Price-Earnings
Market price of common
Share
Earnings per Share
Dividend-Yield
Dividends per common share
Market price of common share
Dividend-Payout
Dividends per common share
Earnings per share
Quick Comparison - Kingfisher Airlines
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Price-Earnings
0
0
0
0
0
Dividend-Yield
0
0
0
0
0
Dividend-Payout
0
0
0
0
0
Quick Comparison - Spicejet
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Price-Earnings
15.32
22.95
0
0
0
Dividend-Yield
0
0
0
0
0
Dividend-Payout
0
0
0
0
0
Quick Comparison - Industry Aggregate
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Price-Earnings
2.9
3.1
-
-
-
Analysis
Price-Earnings Ratio measures how confident the public is in the ability of the company to increase their revenue. P/E should ideally be 15-17 for fair case, 17-25 if company is expected to grow in the future, 25 and above preceded by high growth rate in the past signifies greater prospects else it might be due to spread of rumors. Kingfisher Airlines' ratio is very low to the industry average, indicating that the public feels that the net income of the company will not grow at a fast pace. While Spicejet has a very high ratio indicating that the public feels that the net income of the company will grow at a fast pace.
Dividend Yield measures the returns on stock purchased. The dividend-yield for Spicejet is zero, indicating that the company is most likely reinvesting their profit in the future expansion of the company. Investors who wish to receive a large cash return on their investment each year would not invest in Spicejet. Kingfisher Airlines is not making profits and hence with a dividend-yield of zero, we can conclude that investors would not find it as an attractive option.
Dividend-Payout measures the percentage a company pays out to its investors in dividends. As we can see, Spicejet has a zero dividend-payout ratio, once again indicating that all of their profit is being reinvested into the growth of the company.
Long Term Investment Ratios for Kingfisher Airlines and Spicejet
Objective
To apply ratio analysis to assess the long-term investment levels of Kingfisher Airlines and Spicejet.
The Ratios
The most commonly used ratios by financial analysts for determining the long- term investment of an entity are shown in the following table:
Financial Ratio
Numerator
Denominator
Debt-to-Equity
Total Debt
Total Shareholder's Equity
Interest Coverage
PBDIT
Interest
Return on Shareholders' Equity
Net Income
Total Shareholders' Equity
Dividend Per Share
-
-
Price to Book
Market Price per share
Book Value per share
Fixed Asset Turnover
Sales
Total Fixed Assets
These ratios are used for long-term investment evaluation. The main focus of these ratios is the entity's ability to attract long-term investors. Both investors and shareholders are equally interested in these ratios. These ratios indicate the entity's ability to grow and withstand relatively sour business conditions. Although, these ratios should not be taken at face value since they are dependent on many factors, these ratios are most useful for making similar comparisons in the industry.
Quick Comparison - Kingfisher Airlines
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Debt-to-Equity
6.72
21.83
15.61
6.88
6.77
Interest Coverage
-0.16
-0.87
-1.77
-7.76
-10.29
Return on Shareholders' Equity
-1.45
-6.66
-5.94
-5.03
-3.07
Dividend Per Share
0
0
0
0
0
Price to Book Value
-0.57
-0.31
-0.4
8.78
4.99
Fixed Asset Turnover
2.75
2.44
2.77
4.47
4.76
Quick Comparison - Spicejet
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Debt-to-Equity
0.21
1.81
2.03
2.21
1.80
Interest Coverage
12.24
6.96
-20.8
-11.67
-25.81
Return on Shareholders' Equity
0.25
0.25
-1.46
-0.55
-0.29
Dividend Per Share
0
0
0
0
0
Price to Book Value
4.92
-3.91
-0.75
35.17
5.84
Fixed Asset Turnover
22.56
21.24
17.64
14.98
10.37
Quick Comparison - Industry Average
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Debt-to-Equity
3.78
3.88
2.62
2.07
1.59
Interest Coverage
0.8
0.37
-0.89
-2.16
0.17
Return on Shareholders' Equity
0.07
-0.26
-0.50
-1.08
-0.25
Fixed Asset Turnover
0.67
0.68
0.66
0.70
1.09
Analysis
The Debt-to-Equity Ratio of Spicejet has reduced and is well below the industry aggregate, while the ratio of Kingfisher Airlines is very high compared to the industry average.
The Interest coverage ratio of Kingfisher has been very low as compared to the industry average while that of Spicejet has been improving and is very high as on 2011. Even if the Debt-to-Equity ratio is high, a high Interest Coverage ratio can reduce the risk involved in the company incurring net losses or insolvency.
The comparative analysis shows decreasing stability of Kingfisher Airlines vis-à-vis increasing stability of Spicejet to meet its long-term obligations successfully without being in danger of encountering net losses or insolvency.
Return on stockholder's equity assesses the effective use of resources provided by stockholders. This measure of performance is one of the key profitability ratios. For Kingfisher Airlines the return on equity has been consistently below the industry average, vis-à-vis Spicejet, which has had a significant increase since 2010.
The higher the ratio for Fixed Asset Turnover, the more effective the company is using its fixed assets to produce sales. It appears that both Kingfisher Airlines and Spicejet are reasonably using their fixed assets. They have excess turnover, which would signal the company is strapped for cash.
Dividend per Share (DPS) measures the returns on stock purchased. The DPS for Spicejet is zero, indicating that the company is most likely reinvesting their profit in the future expansion of the company. Investors who wish to receive a large cash return on their investment each year would not invest in Spicejet. Kingfisher Airlines is not making profits and hence with a DPS of zero, we can conclude that investors would not find it as an attractive option.
Short Term Investment Ratios for Kingfisher Airlines and Spicejet
Objective
To apply ratio analysis to assess the short-term investment levels of Kingfisher Airlines and Spicejet.
The Ratios
The most commonly used ratios by financial analysts for determining the short- term investment of an entity are shown in the following table:
Financial Ratio
Numerator
Denominator
Beta Value
-
-
Earnings Per Share
Net Income
No. of Shares
Price-Earning
Market Price
Earnings Per Share
These ratios are used for long-term investment evaluation. The main focus of these ratios is the entity's ability to attract long-term investors. Both investors and shareholders are equally interested in these ratios. These ratios indicate the entity's ability to grow and withstand relatively sour business conditions. Although, these ratios should not be taken at face value since they are dependent on many factors, these ratios are most useful for making similar comparisons in the industry.
Quick Comparison - Kingfisher Airlines
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Beta Value
1.5
Earnings Per Share
-14.47
-66.63
-59.39
-50.26
-30.72
Price-Earning
0
0
0
0
0
Quick Comparison - Spicejet
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Beta Value
1.3
Earnings Per Share
2.50
2.54
-14.63
-5.55
-2.94
Price-Earning
15.32
22.95
0
0
0
Quick Comparison - Industry Average
Financial Ratio
Mar'
2011
Mar'
2010
Mar'
2009
Mar'
2008
Mar'
2007
Earnings Per Share
0.66
-2.55
-5.01
-10.82
-2.45
Price-Earning
2.9
3.1
-
-
-
Analysis
As seen from above table, Beta value for both Kingfisher Airlines and Spicejet are above 1. This indicates stock options for both airlines are risky in short term.
The most popular profitability ratio is Earnings Per Share (EPS). Earnings per share gives a picture of the current net income in a particular period to the number of outstanding shares of stock. Kingfisher Airlines' earnings per share has steadily increased over the past five years but is significantly below the industry average. Spicejet on the other hand has achieved a higher EPS than the industry aggregate since 2010.
Price-Earnings Ratio measures how confident the public is in the ability of the company to increase their revenue. P/E should ideally be 15-17 for fair case, 17-25 if company is expected to grow in the future, 25 and above preceded by high growth rate in the past signifies greater prospects else it might be due to spread of rumors. Kingfisher Airlines' ratio is very low to the industry average, indicating that the public feels that the net income of the company will not grow at a fast pace. While, Spicejet has a very high ratio, indicating that the public feels that the net income of the company will grow at a fast pace.
Future Analysis
Appendix A: Graphs
Earnings per Share
Price to Earnings Ratio
Current Ratio
Quick Ratio
Debt to Equity Ratio
Interest Coverage Ratio
