SpiceJet shares jump 15% in 2 days; here's what analysts say

Shares of budget carrier SpiceJet Ltd continued their strong upward move for the second consecutive session. The stock surged 8.89 per cent to hit a day high of Rs 72.25. At this price, it has gained 14.65 per cent in just trading days and 28.01 per cent in the past one month.

SpiceJet recently said Carlyle Group's commercial aviation investment and servicing unit will write off $40.2 million of the airline's lease arrears and convert $30 million of its arrears into equity. The conversion will be done at Rs 100 per share of SpiceJet.

The write-off comes days after the airline said it will convert dues to Carlyle Aviation into equity and debentures. The airline has been struggling to fully restore operations despite multiple fundraises over the last year. The conversion will "significantly" increase Carlyle Aviation's stake in the carrier, SpiceJet said.

The airline is currently involved in the process of raising funds through a qualified institutional placement (QIP) route.

Aviation regulator DGCA placed SpiceJet under enhanced surveillance after a recent audit revealed "certain deficiencies" late last month.

"SpiceJet was in a downtrend in the past six months. Growing domestic traffic and stable crude prices have given advantages to aviation companies. With that being said, SpiceJet's stock is not out of the woods as the airline is facing severe cash crunch and losing on market share," said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.

"The carrier has been trying to raise money and settle the ongoing issues. Investors with a high-risk appetite should only enter this stock. Existing investors can hold on to the stock," Bathini also said.

Technically, support on the counter could be seen in the Rs 68-66 range. And, a decisive close above Rs 72-73 levels is required for more upside.

"SpiceJet stock price is bullish on daily charts with strong support at Rs 66. A daily close above resistance of Rs 73 could lead to a target of Rs 81 in the near term," said Sebi-registered research analyst AR Ramachandran.

"SpiceJet's counter can hit a potential upside target of Rs 80. Keep stop loss placed at Rs 68 for this trade," said Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking.

"Support will be at Rs 68 and resistance at Rs 72. A decisive close above Rs 72 may trigger a further upside towards Rs 75. The expected trading range will be between Rs 66 and Rs 75 for the short term," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi.

Technically, the scrip traded lower than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The stock's 14-day relative strength index (RSI) came at 64.38. A level below 30 is defined as oversold while a value above 70 is considered overbought.

As per BSE, the carrier's stock has a negative price-to-equity (P/E) ratio of 11.34 against a price-to-book (P/B) value of (-)2.04. Earnings per share (EPS) stood at (-)5.85 with a return on equity (RoE) of 17.95.