Investors Gloomy After IndiGo Shows Interest In Buying Air India
Shares of Interglobe Aviation, parent company of IndiGo, fell over 5 per cent trading at 1171.35 per share on Bombay Stock Exchange (BSE), down by 65 points, on Friday (30 June). The share opened slightly positive, touching an intraday high of 1240 per share and an intraday low of 1160/share.
The news came after Indigo expressed its interest in buying Air India after the Ministry of Civil Aviation announced disinvestment in Air India giving boost to the Government of India of its announced plan to sell stake in national carrier which is laden with Rs 52,000 crore debts.
RN Choubey, Aviation secretary said, "We have received an expression of interest for Air India from IndiGo.” Tata Group is also seemingly interested in buying the debt laden national carrier. However, there is no official statement from the both.
IndiGo is interested in the overseas operations of Air India and plans to take a major share of international traffic and get hands on the economic wealth. It will be difficult for any company to dwell with the gloomy balance sheet that has shown no profit for almost a decade.
Trade experts are bearish on the scrip and are giving a sell call, showing concerns about the investment plan in an equity that has a debt of Rs 52,000 crore. Analysts expect shares to continue its fall further on the news of investment that might hurt the margins of IndiGo as well.
Broking house ICICI Securities said, “The singular concern for any suitor of Air India is its over-leveraged balance sheet.”
IndiGo’s open cash position allows it to bid for Air India even after knowing the market position and deal structure.
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