Sector talk: Aviation

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Aviation - Story

Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Sector talk
Forum Discription: Discussion on sectors with regard to specific matters. We will be discussing the various sectors of the economy and how they would perform. Basically a top down approach.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=612
Printed Date: 04/Apr/2025 at 8:39am

Topic: Aviation - Story

Posted By: ankit18
Subject: Aviation - Story
Date Posted: 22/Nov/2006 at 12:42pm

I think this stock is good, world wide low cost airlines do make a lot of money. Peter Lynch also mentioned in his book, that Southwest Airlines has been a multibagger .

Currently, Deccan Aviation has a market share of 20% and market cap of 1450 crores and Jet Airways has a market share of 30% and markket cap of 5800 crores. Deccan Aviation will surpas Jet in terms of market share in next 9-10 months and become the No.1 Airline of India.

I dare say, i made this post only when the stock is above the IPO price and i did buy in IPO of Deccan Aviation(148).

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Markets are never wrong. Opinions are!!!

Replies:

Posted By: tusharutuja
Date Posted: 23/Nov/2006 at 12:58pm

Hello People,

I am new comer to equitydesk and in just 2 days i am finding this forum to be quite exiciting.

I have a fundamental question here:

Almost everybody out there has a belief in the indian Retail Story in the long run. That's what the forums over here and messages therein also suggest.

If the indian retail story is so exiciting why isn't the aviation sector, if we consider the long term view of the booming indian economy-consumer expenditures-huge young population-changing lifestyles etc???

If we can bet on the malls and theatres and food joints and air conditioners, that cleary impact the rising consumer demads, what keeps us away from the aviation sector? Isn't it a good contrarian buy??

Personally 8% of my portfolio is invested in Jet Airways and after the may carnage and subsequent averaging-sell strategies, i am currently at a No profit - No Loss situation.

My conviction is the aviation industry will surely benefit from the rising consumerism in the long term though its going through a very rough patch currently.

I would like to get the EXPERTS here to comment on my views.

Thanks

Posted By: manishdave
Date Posted: 23/Nov/2006 at 7:33pm

All you said abt aviation industry is true. But about investment as WB said

"Airlines is terrific industry but terrible investment". Players try to cut each other's throat.

I have interest in Taneja Aerospace as they make planes, have airport, make aviation parts and are in maintenance of planes.

Posted By: bebullish
Date Posted: 23/Nov/2006 at 10:17pm

Any industry that has a very high level of competition, will not make money for the stake holders.

I mean how many people you know will not shift to a competiting airline if it offers substantially lower fares? Keep that aside for a moment, i have friends who wait for Rs 1, Rs 9 ticket schemes and then plan their breaks accordingly.

Airline industry is a very high fixed cost and equally high running cost. Hence the seat factor or number of seats sold per flight make a lot of difference to the bottomline.

IF a industry is commoditiesed the margins go downhill and the returns go for a toss.

Even in developed countries where flying is big, airline stocks have never been favourties.

Instead of going for the airline industry, the best bet is to go in airline manpower training industry stocks if available. There is so much shortage of good pilots, pursers, air hostesses. Infact the other day i saw a article that defence pilots are being lured into commercial flying.

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Success is nobody's monopoly. It requires action & imagination only.

Posted By: basant
Date Posted: 23/Nov/2006 at 10:39pm

Instead of going for the airline industry, the best bet is to go in airline manpower training industry stocks if available. There is so much shortage of good pilots, pursers, air hostesses.

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A very piquant observation. APtech shall be training air hostess if I remember correctly. Also this industry suffers from a huge lack of entry barrier so while no one can compete with Indian Railways Indian AIrlines has been reduced to a marginal player.Moreover one of the most interesting things about this industry is the huge dependence on crude the direction of which is also unpredictable.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: deveshkayal
Date Posted: 28/Nov/2006 at 2:01pm

JP Morgan has a target of 50 on Deccan Aviation. Very bearish mood on this.Lets see who wins Shankar or JP Morgan

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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett

Posted By: sureshbazi
Date Posted: 07/Sep/2008 at 1:50am

Best is to go for Axe theme, the companies which will benefit from this aviation boom. example : VIP industries in bagage, GMR infra in Airports etc

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'It is only when you combine sound intellect with emotional discipline that you get rational behavior.' – WB.

Posted By: basant
Date Posted: 07/Sep/2008 at 8:31am

ANyone travelling in flight would probably have a Samsonite or a Tourister. VIP is for the typical train/bus traveller.

Posted By: nitin_jagtap
Date Posted: 07/Sep/2008 at 10:51am

Originally posted by sureshbazi

GMR infra in Airports etc

....with too much of govt control and interventions, huge initial costs leading to long gestation periods ....long pending land aquistions costs and problems ...this would be a difficult sector as of now ...I would look for pure play operators instead who will be asset light ....dont have too much of impact due to govt interventions ...the developers still have a uphill task...if they dont get their math right ...case is Hyderbad airport where expected trafffic has been below expectation so far .

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Warm REgards
Nitin Jagtap

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