SpiceJet Shares Take A Dive: Rakesh Gangwal Denies Stake Acquisition Reports
SpiceJet, one of India's prominent low-cost carriers, witnessed a significant downturn in its shares, plummeting over 11% on October 16. The drop followed reports suggesting that Rakesh Gangwal, co-founder of IndiGo, was considering acquiring a stake in the financially troubled SpiceJet.
Just a few days prior, on October 13, SpiceJet's shares had surged nearly 20% due to these reports, indicating a potential acquisition by Gangwal. However, this upward trajectory was short-lived, as bankers closely associated with Gangwal promptly dismissed the claims, asserting that he had no intention of investing in SpiceJet. This refutation resulted in a sharp decline in SpiceJet's stock value.
Despite the drop, SpiceJet shares showed a mild recovery during noon trading, stabilizing at Rs 39.79 on the National Stock Exchange (NSE) by 12:35 pm, reflecting an 8% decrease from the previous day’s closing.
The debunked rumors regarding Gangwal's interest in SpiceJet deeply upset the co-founder, as it had apparently misled retail investors. In response, Gangwal is contemplating seeking the intervention of the Securities and Exchange Board of India (SEBI) to investigate the matter.
Gangwal's Stake in IndiGo
As of June 2023, Rakesh Gangwal and his wife, Shobha Gangwal, possess a 13.23% and 2.99% stake, respectively, in InterGlobe Aviation, the parent company of IndiGo. Additionally, their Chinkerpoo Family Trust holds a 13.5% stake in the airline, according to exchange data. However, Gangwal is in the process of exiting the carrier.
Share Performance and Q1 Results
Over the last six months, SpiceJet's stock has demonstrated resilience, rallying by 24.51%, outperforming the benchmark Nifty 50. Despite this, the stock is trading below its 52-week high of Rs 43.30, recorded in December 2022.
In terms of financial performance, SpiceJet reported a net profit of Rs 205 crore for the April-June quarter, a remarkable turnaround from the Rs 789 crore loss recorded in the same quarter the previous year. This resurgence was attributed to the robust demand for air travel, leading to the industry's highest domestic load factor of 90% in the June quarter.
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