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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 790.52 | ACUITE B+ | Stable | Upgraded | - |
| Bank Loan Ratings | 78.20 | - | ACUITE A4 | Reaffirmed |
| Bank Loan Ratings | 581.28 | - | ACUITE A4 | Upgraded |
| Total Outstanding | 1450.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has upgraded its long-term rating to ‘ACUITE B+’ (read as ACUITE B plus) from ‘ACUITE D’ (read as ACUITE D) on Rs. 278.48 Cr. bank facilities of Spicejet Limited. The outlook is 'Stable'.
Acuité has upgraded its long-term rating to ‘ACUITE B+’ (read as ACUITE B plus) from ‘ACUITE C’ (read as ACUITE C) on Rs. 512.04 Cr. bank facilities of Spicejet Limited. The outlook is 'Stable'. Acuité has reaffirmed its short term rating of 'ACUITE A4' (read as ACUITE A four) on the Rs. 78.20 Cr. bank facilities of Spicejet Limited. Acuité has upgraded its short term rating to 'ACUITE A4' (read as ACUITE A four) from ‘ACUITE D’ (read as ACUITE D) on the Rs. 581.28 Cr. bank facilities of Spicejet Limited. Rationale for rating The upgrade in the rating takes into account the regularisation of the delays in the debt obligations from Yes Bank by Spice jet along with an improved liquidity position with the infusion of funds through QIP. The company has raised Rs. 3000 Cr. through QIP (Qualified Institutional Placement) in September 2024., the major investors incudes Goldman Sachs, Morgan Stanley, Nomura Singapore, etc. The company has planned to utilize this fresh QIP proceeds to pay off the all the statutory dues, settlement with their lessors, employee salaries, general corporate expenses, ungrounding of fleet, expansion from fresh fleets, etc. as per their revival plan in the aviation industry. As per the management, they have cleared all the pending airport dues, employee salaries and statutory dues (GST & TDS) amounting to Rs. 684.99 Cr. as on 30th September 2024. As on 30th September 2024, SpiceJet's operational fleet of is 24. SpiceJet is planning to settle with the lessors and few of the settlement already took place post QIP. SpiceJet has booked revenue from operations of Rs. 1,708.24 Cr. in Q1 FY 24-25 against Rs. 2,003.59 Cr. in Q1 PY 23-24, thereby reducing the topline by 14.74%. This is mainly due to reduction in fleet size which led to declining market share over the period of time. The EBIDTA and net profits of the company is Rs. 43.18 Cr. and Rs. 158.19 Cr. for Q1 FY 24-25 against Rs. 265.46 Cr. and Rs. 197.63 Cr. for Q1 PY 23-24 respectively. However, the rating is constraint due to the weak earning profile dented through the continuous losses from FY 2019 till FY2024 accordingly impacting the financial profile and liquidity position. Further there remains an execution risk as per their revival plan in the aviation industry and timely repayment of their operational and financial creditors post QIP. |
| About the Company |
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Established in 1984 and based in Gurugram (Haryana), SpiceJet Limited was initially set up as an air taxi provider. In 1993, the company diversified into domestic aviation service provider. SpiceJet follows the Low-Cost Carrier (LCC) business model with an objective to deliver the lowest air fares with the highest consumer value, to price sensitive consumers making flying accessible for the wider population. SpiceJet, a public limited company, is listed on Bombay Stock exchange (BSE) and National Stock Exchange (NSE) and is promoted by Mr. Ajay Singh with majority holdings.
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| About the Group |
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has considered the consolidated business and financial risk profiles of SpiceJet Limited and its subsidiaries to arrive at the rating. Following is the list of entities consolidated:
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| Key Rating Drivers |
| Strengths |
| Experienced management and healthy business model with diversified revenue streams
SpiceJet, a Low-cost carrier segment airline provider, has established presence in the Indian aviation industry. Mr. Ajay Singh, the Chairman and Managing Director of SpiceJet, has more than 15 years of experience in the line of aviation and is involved in the day-to-day operations of the company. In the past, through his extensive and rich experience, Mr. Singh successfully turnaround SpiceJet Limited by undertaking and implementing various measures in revenue and cost management, customer retention and employee welfare. SpiceJet, over the years with its established presence in the aviation industry has been able to diversify its revenue stream for its cash generation. The company majorly has two streams; Primary (Passenger air travel), Ancillary (Preferred Seating, Business Class, Spice Max, Loyalty Programmes, Insurance, Meals, Spice Vacations, Lounge, Visa, Cab, Cargo, Onboard Merchandise), and, Cargo business. The company has also added aircrafts for passenger and cargo operations on wet lease basis. Acuité believes that the presence of diversified revenue stream and robust fleet will aid SpiceJet’s revenue profile over the medium term. Issue of proceeds through QIP SpiceJet has raised Rs. 3000 Cr. through QIP (Qualified Institutional Placement) in September 2024The. allotment of QIP is to the pool of 87 top tier institutional marquee investors which includes Goldman Sachs (Singapore), Morgan Stanley Asia, BNP Paribas Financial Markets ODI, Nomura Singapore, Tata Mutual Funds, Discovery Global, Autumn Investment, among others. SpiceJet is set to receive another Rs. 736 Cr. in January 2025 from their previous round of funding through preferential warrants. SpiceJet has planned to utilize this fresh QIP proceeds to pay off the all the statutory dues, settlement with their lessors, employee salaries, general corporate expenses, ungrounding of fleet, expansion from fresh fleets, etc. as per their revival plan in the industry. |
| Weaknesses |
| Weak financial position
The group’s financial risk profile is poor marked by negative net worth of Rs. 5,233.05 Cr. in FY 2024 against negative Rs. 5,851.67 Cr. in FY 2023. The Company had raised funds in FY 23-24 through preferential share issue of approximately Rs. 1060 Cr. Further, the debt-equity ratio of the company stood at (0.22) times in FY24 against (0.20) times in FY23. The interest coverage ratio of the company stood at 1.71 times in FY24 against 0.04 times in FY23. The DSCR of the company stood at 0.71 times in FY24 against 0.04 times in FY23. The TOL/TNW ratio stood at (2.23) times in FY24 against (2.33) times in FY23. Acuite believes that with fresh proceeds from QIP, the financial risk profile of SpiceJet Group will improve in near future. Susceptible to volatility in aviation fuel prices and fluctuation in foreign exchange rates The aviation turbine fuel (ATF) is one of the major cost component of SpiceJet which accounts around 35 - 40 per cent of the revenue of the company. The ATF prices are directly linked to the crude oil prices which remain volatile and the company incurs a major part of its operating expenses like lease rentals, aircraft maintenance and repairs in foreign currency. The profitability of SpiceJet is highly susceptible to the volatility in ATF prices and fluctuations in foreign exchange rates. Further, the company faces intense competitions from other LCC operators in the industry which restricts SpiceJet to pass on any increase in prices to its customers. Nevertheless, higher proportion of fuel efficient Boeing Max aircrafts to be operated by the company in the near future is likely to partially offset the risk of volatility in ATF prices to a certain extent. Declining Market Share SpiceJet’s market share dropping over the years from 17.9% in 2014 to 14.9% in 2020 when pandemic hit India. In 2022, the market share further drastically falls to 7.6% followed by 5.5% in 2023. Early this year, it further declined from 5.6% in January 2024 to 2.3% in August 2024. Acuite believes that market share of SpiceJet will improve in near future with ungrounding of fleet and induction of fresh fleet in near future. |
| ESG Factors Relevant for Rating |
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Environment Environmental issues related to the air transport industry is a key concern. GHG emissions, air pollutant emissions, environmental management, energy efficiency, ESG reporting and waste management are significant environmental issues for this industry. Social Labour management issues, such as employee safety & development and employment quality, is a crucial issue in air transport industry. Furthermore, key material issues such as community support & development, product quality & safety, human rights, equal opportunity and responsible procurement have a significant impact on the social scores for this industry. Governance Air transport industry is highly exposed to governance risks associated with regulatory compliance, board oversight, business ethics and corrupt practices. Furthermore, inadequate anti-takeover mechanism, management & board compensation, board independence & diversity, audit committee functioning, financial audit & control and shareholders’ rights are the key material issues for this industry. |
| Rating Sensitivities |
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| Liquidity Position |
| Stretched |
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The liquidity profile of the group is stretched marked by Rs. 3000 Cr. proceeds raised through QIP out of which Rs. 2,292.99 Cr. is the unutilized balance amount available in their deposits as on 30th September 2024. They will utilize these proceeds to pay off the operational creditors, settle with lessors, ungrounding of fleet & induction of new fleet. Further, the company set to receive additional proceeds of Rs. 736 Cr. in January 2024 from previous round. The group has the cash & bank balance of Rs. 203.11 Cr. as on 31st March 2024. The group generated net cash accruals of Rs. 329.40 Cr. in FY 2024. Acuite believes that the group will be able to improve liquidity in near future with having additional proceeds in account and on the number of fleets operational in coming time.
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| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 7085.31 | 8873.59 |
| PAT | Rs. Cr. | (423.72) | (1512.95) |
| PAT Margin | (%) | (5.98) | (17.05) |
| Total Debt/Tangible Net Worth | Times | (0.22) | (0.20) |
| PBDIT/Interest | Times | 1.71 | 0.04 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||||||||||||||||||
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