Air India’s market share is shrinking every year. There are not many planes on order. Indigo is the lowest cost airline.Can you imagine he invested Rs 300 crore, he has taken away Rs 3,500 crore as dividend. The Return on Capital (RoC) is 300 percent.
And if you just make his first quarter’s earnings into four he will earn about just 640 multiplied by 4 is Rs 2,600 crore which is about Rs 80 per share. Rs 80 per share what price is it coming. At 765 it is coming at 10 times earnings and I am very bearish on oil prices. I don’t see them going anywhere in 3-5 years.
So, it is a leader, the industry – one large player is shrinking, others don’t have money, he has got the largest planes on order, he is the lowest cost operator. It is a no brainer–said Rakesh Jhunjhunwala
One reply on “Rakesh Jhunjhunwala on Indigo”
I think Rakesh Jhunjhunwala has lost touch with realty. In my view Indigo is as big fraud as Satyam. First you make profits by selling planes at higher than purchase price and lease back at this inflated price. The company will pay higher lease every year. Then you payout everything earned as dividend to promoter before listing. So what is promoter investment in the company -ZERO.
Now the company will foot bill for your profits and dividend by paying higher lease rentals.
I bet in long term once this cycle of delivery of aircrafts slows down, it will make losses like most other airlines. By that promoters would have enriched themselves by this up fronting profit scheme and public will hold baby.