Airlines fly high on bourses

Aviation stocks - Jet Airways, Deccan Aviation, SpiceJet and Jagson Airlines - closed at their 52-week highs on the Bombay Stock Exchange on Tuesday in  falling market. All the four stocks gained between 5 per cent and 20 per cent on Tuesday.

Jet Airways gained to Rs 1,048, Deccan Aviation to Rs 320.70, SpiceJet to Rs 71.50 and Jagson Airlines to Rs 34.50.

Jet Airways, the oldest private carrier having a market share of 22.5 per cent, gained 5 per cent on Tuesday. The stock closed at a one year high of Rs 1,024 against its previous day's close of Rs 977.55 on the BSE.

Jagson Airlines was the largest gainer with a 20 per cent rise from Rs 27.75 on Monday. SpiceJet, another low-cost player, was the second largest gainer at 17 per cent to Rs 69.30 (Rs 59.40). Deccan Aviation went up by 11.5 per cent to Rs 316.60 (Rs 283.95).

The aviation report by broking firm Prabhudas Liladher expects air travel to grow 16 per cent CAGR (14.7 per cent for domestic and 16.5 per cent for international passengers) over the next four years.

The growth in passenger traffic will drive a far larger growth of 20 per cent in airline revenues according to research report. With a strong demand growth, the onset of rational pricing behaviour and the fact that the airline industry has underperformed the Sensex by about 19 per cent over the last 18 months, the broking house expect valuations to improve in future.