Three reasons why Jet Airways is flying high on Dalal Street

Shares of Jet Airways extended gains in Monday's trade and rose over 8 per cent on the Bombay Stock Exchange (BSE) to clock 17.42 per cent spurt in two consecutive trading sessions.

In the previous session, the stock settled at Rs 436.70, up 9.36 per cent, while it hit an intraday high of Rs 472, up 8.08 per cent in today's trade. The scrip closed 3.06 per cent up at Rs 450.05.

Here are three reasons shaping positive sentiment on the scrip:
  

1. Rakesh Jhunjhunwala buys 1.05% stake in Jet Airways: Ace investor Rakesh Jhunjhunwala on Friday picked up 1.05 per cent stake in Jet Airways for Rs 50.52 crore through an open market transaction. According to the bulk deals data available with NSE, Jhunjhunwala's RARE Enterprises acquired 11,95,000 shares or 1.05 per cent stake in the private airline. The shares were bought at an average price of Rs 422.76, valuing the transaction at Rs 50.52 crore.
2. Encouraging response to IndiGo IPO: Low-cost carrier IndiGo's parent company InterGlobe Aviation's IPO sailed through primary market with large oversubscription. The Rs 3,018-crore public offer, the biggest in nearly three years, was six times oversubscribed as foreign investors scrambled to buy into India's biggest airline. The thumping response to the IPO has now revived the positive sentiment on the aviation sector, and also on the aviation stocks such as Jet Airways and SpiceJet.
3. Fall in crude prices: Brent crude prices have been on a falling spree. Even as the commodity has made some attempt to bounce back, the upside has largely been capped due to supply glut amid subdued global economic environment. Declining global oil prices have made oil imports cheaper, resulting in price cut for the airlines. Air Turbine Fuel (ATF) constitutes more than 30 per cent of airlines' expenditure. The price reduction will ease the financial burden of cash-strapped carriers.

Private carrier posted a consolidated net profit of Rs 83 crore in the second quarter of this fiscal year, ended September 30, against a net loss of Rs 42.8 crore a year-ago period, helped by healthy 26.3 per cent growth in passenger traffic coupled with improved aircraft utilisation by the airline.

Total sales grew by 8.1 per cent to Rs 5,504 crore in the July-September quarter of the current fiscal as compared to Rs 5,092 crore in Q2FY15, the company said in a release.  

"It is encouraging to report a profit in the second quarter, which is traditionally a lean season for the aviation sector...The growth in passengers flown by Jet Airways and the improved aircraft utilisation have been significant contributors to the performance in the second quarter," Jet Airways Chief Executive Cramer Ball said.