Low-cost carrier SpiceJet witnessed a sharp decline of over 11 percent on October 16, following the dismissal of reports by Rakesh Gangwal, the co-founder of IndiGo. Gangwal refuted claims suggesting that he was exploring the acquisition of a stake in the debt-laden SpiceJet.
Just a few days earlier, on October 13, reports had emerged indicating that Rakesh Gangwal was considering purchasing a stake in SpiceJet, leading to a significant surge in the domestic carrier’s share price. The stock had skyrocketed by nearly 20 percent on the same day as the news broke, with many anticipating Gangwal’s involvement in rescuing the financially troubled airline.
However, after sources close to Rakesh Gangwal vehemently denied these claims, stating that he had no intention of investing in SpiceJet, the airline’s stock faced a sharp decline on October 16.
SpiceJet shares did experience a slight recovery during noon trading, and by 12:35 pm, the stock was trading at Rs 39.79 on the NSE, marking an 8 percent drop from the previous day’s closing price.
Reportedly, Gangwal expressed his displeasure with the rumors, which he believed had misled retail investors. In response to this, he is contemplating requesting the market regulator, the Securities and Exchange Board of India (SEBI), to investigate the matter further, as reported by a source.
Gangwal’s Stake in IndiGo
As of June 2023, Rakesh Gangwal and his wife Shobha Gangwal held stakes of 13.23 percent and 2.99 percent, respectively, in IndiGo’s operator, InterGlobe Aviation. Additionally, their Chinkerpoo Family Trust held a 13.5 percent stake in the airline, according to exchange data. However, Gangwal is currently in the process of exiting the carrier.
Over the past six months, SpiceJet’s stock has shown a robust performance, rallying by 24.51 percent. It has outperformed the benchmark Nifty 50. Despite this positive trend, the stock still trades below its 52-week high of Rs 43.30, achieved in December 2022.
During the April-June quarter, SpiceJet reported a net profit of Rs 205 crore, a notable turnaround from a loss of Rs 789 crore in the same quarter the previous year. This positive shift was attributed to strong demand in air travel. The airline also achieved the industry’s highest domestic load factor, standing at 90 percent during the June quarter.