Preethi MBA - 027

A Study on Aviation Stock Performance with Reference to
Karvy Stock Broking Limited.
Submitted By
Madhuri Preethi
160618672027
In partial fulfillment for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
Department of Business Management

Stanley College of Engineering and Technology for Women
Affiliated to Osmania University, Hyderabad
2018-2020
DECLARATION
I hereby declare that this project report titled “A Study on Aviation Stock Performance with
reference to Karvy Stock Broking Limited" is submitted by me in fulfillment for the award
of Master of Business Administration at Stanley College of Engineering and Technology for
Women. I further declare that this project undertaken be me is not been copied or lent and it is
not submitted to any other university or institute for the award of any degree/diploma/certificate
or published any time before.
MADHURI PREETHI
160618672027 Signature of the Student

1st September 2020
CERTIFICATE
This is to certify that the Project Report titled “Aviation Stock
Performance With Reference to Karvy Stock Broking Limited” Submitted fulfillment for
The award of MBA Programme of Department of Business Management, O.U, Hyderabad was
Carried out by Madhuri Preethi With H.T.No. 160618672027 Under my guidance. This has
not been submitted to any other university or Institution for the award of any
Degree/Diploma/Certificate.
Internal Guide Head of the Department

ACKNOWLEDGEMENT
I with extremely grateful to my project guide Mrs. Syed Afshan Sultana, assistant professor for
the valuable guidance and cooperation throughout my project work.
I take much pleasure to express deep sense of gratitude and thankfulness to Head of the
Department of Business Management Dr. Y. Padma, Stanley College of Engineering and
Technology for Women.
I wish to express my gratitude to Karvy stock Broking Limited for giving me an opportunity to
be a part of their organization and for giving me the opportunity to undertake this project work
in their organization.
I wish to convey my sincere thanks to Dr. Satya Prasad Lanka, Principal for his continuous
support during the course.
My sincere thanks to Mr. K. Krishna Rao, Correspondent for giving an opportunity to complete
MBA program.
I am thankful to all the faculty members for their support, encouragement and their valuable
guidance in the completion of my project.
Finally, I am also thankful to my family and my friends for their support and encouragement
throughout the project.
MADHURI PREETHI
CONTENTS
Chapter Page Numbers

From-To
List of Tables i-ii

List of Graphs iii
Abstract
I Introduction 1-12
II Review of literature 13-24
III Industry and Company Profile 25-35
IV Data Analysis and Interpretation 36-72
V Findings, Conclusions and Suggestions 73-75
BIBLIOGRAPHY 76
LIST OF TABLES
Tables No. Tables Page Number

4.1 Calculation of Risk Return analysis on Globalvect 37
for the year ended 2014-2015




4.6 Calculation of Risk Return analysis on Jet airways 47





4.11 Calculation of Risk Return analysis on spice jet for 57

the year ended 2014-2015



i
4.16 Calculation of Risk Return analysis on Indigo for the 67

year ended 2016-2017


ii
LIST OF GRAPHS
Tables No Graphs Page Number

4.1 Closing Price of Globalvect for 2014-2015 38
4.6 Closing Price of Jet airways for 2014-2015 48
4.11 Closing Price of Spice jet for 2014-2015 58
4.16 Closing Price of Indigo for 2016-2017 68
iii
ABSTRACT
The present study is to understand the concepts of Indian Aviation Industry and its growth over
a period. Aviation in India is the fastest growing aviation in the world. Indigo, Jet airways,
spice jet, and Globalvect are the major carriers in the Indian aviation industry. India is the
world’s third largest domestic and overall civil aviation market. The case study analyses the
airline industry structure till the year 2019. The performance of one of the player’s spice jet in
particular during the period.
Aviation Industry is one of those qualitative industries where people can actually learn many
new things apart from the normal techniques. This industry has given many young talents to
India where they are giving their best to make the country proud and productive in the
economy. Many people can take it as their career as it is the opportunity that is very useful for
the ones who aspire their lives to be qualitative in the field of Aviation.
CHAPTER –I
INTRODUCTION
Chapter – 1
Introduction
INTRODUCTION
The companies in order to raise capital and are bought by the investors in order to acquire a
portion of the company. A stock market is also known as an equity market or share market is a
collection of buyers and sellers of stock. These stocks represent ownership interests in
companies. These may include publicity or privately traded securities. These any include
securities listed on a public stock exchange, as well as stock that is only traded privately. Stock
exchanges list shares of common equity as well as other security types.
The market in which shares of publicity held companies are issued and traded either through
exchanges or over-the-counter markets. Also known as the equity market, the stock market is
one of the most vital components of a free-market economy, as it provides companies with
access to capital in exchange for giving investors a slice of ownership in the company.
The stock market lets investors participate in the financial achievements of the companies
whose shares they hold. When companies are profitable, stock market investors make money
the dividends the companies may pay out and by selling appreciated stocks at a profit capital
gain. The downside is the investors can lose money if the companies whose stocks they hold
lose money, the stock price goes down and the investor sell the stocks at a loss.
Bombay Stock Exchange
Bombay stock exchange is located at Dalal Street, Mumbai. It was established in the year 1875.
It is also called as Bombay stock exchange limited. Bombay stock exchange is the oldest stock
exchange in Asia with heritage. Bombay stock exchange provides an efficient and transparent
market for trading in equity, debt instruments, derivatives, and mutual funds. It is also a plat
form for trading in equities of small and medium enterprises. More than 5000 companies are
listed on Bombay stock exchange, making it the world’s top exchange in term of listed
members. It also provides opportunity to trade in the equities of small and medium term
enterprises. About 5000 companies are listed in the Bombay Stock exchange.
National Stock Exchange
The National Stock Exchange is located in Mumbai. It was incorporated in the year 1992 and
became a stock exchange in 1993. The basic purpose of this exchange was to bring the
transparency in the stock markets. It started its operations in the wholesaler debt market in
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June 1994. The equity market segment of the National Stock Exchange commenced its
operations in November, 1994 whereas in the derivatives segment, it started it operations in
June, 2000. It has completely modern and fully automated screen based trading system having
more than two lakhs trading terminals, which provides the facility to the investors to trade from
anywhere in India. It is playing an important role to reform the Indian equity market to bring
more transparent, integrated and efficient stock market.
An equity investment generally refers to the buying and holding of the shares of the stock on a
stock market by individuals and firms in anticipation of the income from dividends and capital
gains. It is the ratio of the dividend yield if an equity and the long term bond.
Equities are shares in a company that are owned by people who have a right to vote at the
company meeting and the earn part of the company’s profits after the holders of preference
shares have been paid.
Equities have the potential to increase the value of overtime. It also provides your portfolio
with the growth of necessary to reach the long term investment goals. The equity investment
by the principals should be distinguished from the roles as employees of the company and
rewarded only the based upon the performance if the entity. The equity investment was made
to engage in a meaningful way to contribute to an organization.
An investment is an asset or item acquired with the goal of generating income or appreciation.
An investment is the purchase of goods that are not consumed today but are used in the future
to create wealth. In finance an investment is a monetary asset purchased with the idea that the
asset will provide income in the future or will later be sold at a higher price for a profit. It is
the process of investing money for profit. Investment is total amount of money spent by a
shareholder in buying shares of a company.
Money that is invested in a firm by its holder of the common stock but which is not returned
in the normal course of the business. The investors recover it only when they sell their
shareholdings to other investors, or when the assets of the firm are liquidated and proceeds
distributed among them after satisfying the firms obligations. It is also called as equity
contribution.
Investment management once seemed a simple process. Well-heeled investors would hold
portfolios composed of stocks and bonds of blue chip industrial companies, treasury bonds,
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notes and bills. The choices available to well-off investors were much more limited, confirmed
primarily to passbook savings accounts.
To invest in equities for long term, we have to take a step in right direction .Equities can help
you grow your wealth in a safe and fruitful manner. It requires a good amount of knowledge
about the flourishing companies and the potential companies that would make huge profits.
Investing in equities is riskier than and definitely demands more time than investing through
mutual funds. An equity investor, you are part owner of a company and hence participate in
the growth opportunities that your company can benefit from. Also, as good companies are
normally able to adjust to inflation by either increasing prices or by controlling costs, equities
also normally offers the best hedge to inflation.
Identify the right company in all about looking for growth-sustainable, superior at the minimum
20% of growth. And this growth should be profitable that is the company should earn a superior
at least 20% of return on its shareholders capital.
Mirroring the diversity of modern society, the investment ice cream parlor now makes available
a myriad of flavors to the investing public. Investors face a dizzying array of choices. The
ability to purchase different securities has become both less expensive and more convenient
with the advent of advanced communications and computer networks, along with the
proliferating for mutual funds that has developed to serve large or small investors.
The trend of equity investment and finance has been reshaped as the sources of investment
by an ordinary low profile investors and the market also reached the level of preference by
individual investors of both gender.
Dealing with equity finance and investment has become a sophisticated process by any
investors with limited knowledge of financial markets. The level of investment has been
augmented in the equity finance and the perception of investors are also changed made this
market as the source of market ability and investor behavior has become a prominent attribute
for the growth of this market.
Investment environment encompasses the kinds of marketable securities that exist and where
and how they are bought and sold. Investment process is concerned with how an investor should
proceed in making decisions about what marketable securities to invest in, how extensive the
investments should be and when the investment should made.
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These are four types of investments. They are:
 Equity investments
 Non-equity investments
 Real investments
 Financial investments
Equity Investment
Fixed returns instruments, as the name suggests, offer investors a predetermined (fixed) rate of
return during the investment tenure. Since fixed return instruments are considered to be safe
and secure, they are typically preferred with low-risk appetite. On the other hand, in the case
of market-linked investments such as equity investments such as equity investments, returns
are neither fixed nor assured but dependent on the performance of the underlying asset. Market-
linked instruments can further subdivided into two key categories equity investment and non-
equity investments. In the case of equity investments, the amount is basically invested in the
stocks and equity derivatives of listed and unlisted companies.
Non-Equity Investments
A major chunk of non-equity investments is channeled into bonds as well as a range of money
market instruments such as treasury bills, certificates of deposits, commercial papers,
repurchase agreements .Since market movements play crucial role in the performance of equity
investments as well as non-equity investments, and these investments feature a significant
element of risk. In the following sections, various aspects of investments made into equities
will be discussed in greater detail
Real Investments
Real investments is money that is invested in tangible assets and productive assets such as
machinery and plant, as opposed to investments in securities or financial instruments.
Financial Investments
Financial investment is an asset that you put money into with the hope that it will grow or
appreciate into a larger sum of money. It involve contracts written on pieces of paper such as
common stocks and bonds. Investment in securities such as shares, debentures and bonds is
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profitable as well as exciting, but it involves great deal of risk, investing in financial securities
is considered to be one of the best avenues for investing once savings. While it is
acknowledged to be one of the most risky avenues of investment. Even Indian government
want to encourage people in rural areas to invest in equities. This will help the markets to
stabilize by tapping the rural areas and decreases the dependency on foreign institutional
investors.
Types of financial investments
 Bonds
 Equities
 Mutual funds
 Gold
Bonds
Bond is a long term contract under which a borrower agrees to make payment of interest and
principal on specific date to the holders of the bond. Bonds are usually traded through the
brokers and financial instruments group is called fixed income. Bonds have the maturity date.
They also have to pay back the money to the investors more than they paid for the bond. All
documents contracts and loan agreements are bonds.
Equities
Equities are share of a company that are owned by the people who have a right to vote at the
company meetings and to the receive part of the company’s profits after the holders of
preference shares have been paid. The equities does not pay a fixed interest rate, they don’t
offer the guaranteed income.
Mutual fund
Mutual funds are often a pooled collection of stocks and bonds that are over seen by the
professional managers. Mutual funds invest in a vast number of securities and performed by
usually tracked change in the total market capital by the funds. Mutual funds often usually
focus on the specific type of investment such as small companies and large companies, bonds
or real estate mutual funds can appreciate in value and can pay dividends. Mutual fund can
have high risk and low risk it depending on the type of fund.
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Gold
Gold is a precious metal that you can invest in gold is often a small part of a portfolio that
appreciates over time. We can invest in silver, copper and other metals. Over the long term
precious metals are fairly low risk in the short term. Gold traded on the stock exchange in the
form of an investment implies to the securities.
About Aviation
Aviation refers to the activities surrounding mechanical flight and the air craft industry.
Aircraft includes fixed –wing and rotary –wing types , morph able wings, wing-less lifting
bodies as well as lighter than the air craft . Aviation began in the 18th century with the
development of the air balloon an apparatus capable of atmospheric displacement through
buoyancy .since that time aviation has been technologically revolutionized by the introduction
of the jet which is permitted a major form of transport throughout the world.
General aviation covers a huge range of activities, both commercial and non-commercial,
including private flying, flight training, air ambulance, police aircraft, aerial firefighting, air
charter, bush flying, gliding, and many others. Experimental aircraft, light-sport aircraft and
very light jet have emerged in recent years as new trends in general aviation.
Aviation Industry is one of the fastest growing airlines industries in the world. The history of
Indian aviation industry is started in December 1912 with it is first domestic air route between
Karachi and Delhi. It was opened by the Indian air services in collaboration with the UK based
imperial airways as an extension of London- Karachi flight of the imperial airways.
During the period of independence. 9 air transport companies were carrying both air cargo and
passengers in the Indian Territory. In 1948, the Indian government and Air India set up a joint
sector company, Air India International to further strengthen the aviation industry of India. As
a part of nationalization in 1953 of Indian airlines brought the domestic civil aviation sector
under the view of Indian government. Later till the mid 1990’s government owned airlines
dominated Indian Aviation Industry. Where the government adopted the open sky policy in
1990 and other liberalization policies the Indian Aviation made went under a rapid and dramatic
information.
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Aviation Sector in India
The Indian aviation industry is one of the fastest growing aviation industries in the world. The
government open sky policy hassled too many overseas players entering the market and the
industry has been growing both in terms of players and number of aircrafts. Today, private
airlines account for around 75 percent share of the domestic aviation market.
India is the 9th largest aviation market in the world. According to the ministry of civil aviation
around 29.8 million passengers traveled from India. During 2008, an increase of 30 percent on
the previous year. Further, due to enhanced opportunities and international connectivity, 69
foreign airlines from 49 countries are flying to India.
Factors Influencing the Growth Rate Aviation Industry
 Increased inward and outward of tourism.

 Increased competition has driven down prices and margins.
 Additional purchasing power due to rapidly rising real incomes amongst the middle
class.
 Increased business trade due to the rapidly growing economy and free trade agreements
with neighboring countries.
 Favorable government policies and tax reforms.
Aviation stocks
Spice jet, jet airways, indigo and Globalvect are the airlines that are issuing their shares in the
market.
Spice Jet
Spice jet is one of the recent entrants of the domestic aviation sector in India. Spice jet limited
is an Indian low cost airline headquartered in Gurgaon, India. Spice jet airlines was known as
royal airways. It is the most profitable airline in the country and the only profitable airline
among the NSE and BSE listed companies. Spice jet was voted as the best low-cost airline in
south Asia and central Asia region by skirted in 2007. It is the second largest airline in the
country by number of domestic passengers carried, with a market share of 13.6% as of march
2019. The airline operates 312 daily flights to 55 destinations, including 47 Indian and 7
international destinations from it is hubs at Delhi, Mumbai and Hyderabad. The vision of spice
7
jet is to ensure that flying is no longer only for CEO’s and business travelers, but for everyone.
The mission of spice jet is to become India is preferred low cost airline, delivering the lowest
air fares with the highest consumer value, to price sensitive consumers.
Indigo
Inter Globe Aviation Limited is an Indian low cost airline head quartered at Haryana, India. It
is the largest airline in India by passengers’ carried and fleet size. The airline is also one of the
fastest growing airlines in the world. India is best on time performance and least flight
cancellations. Indigo offers a premium service called indigo plus. Where the passengers, at a
higher fare, can avail additional benefits like a pre-assigned seat and a complimentary meal on
board. It is also the largest individual Asian low cost carrier and the seventh largest carrier in
Asia with over 46 million passengers carried in 2017. The airline became the largest Indian
carrier in passenger market share in 2012. The marketing strategy is used to focuses on one
thing is that one type of airplane, fare, customer service route etc.
Jet Airways
Jet airways is the second largest airline in India. Jet airways is a grounded Indian international
airline based on Mumbai, India. Jet airways was the largest commercial passenger airline in
India with a passenger market share of 22.6%. The mainly spice jet and indigo airlines is
lowering ticket fares in the following years. Jet airways surge on earnings outlook.
The vision of jet airways is organization of vision is to become the best airline in the world and
to come on the top five preferred airlines. The mission of jet airways is most preferred domestic
in India. The future outlook is to establish itself as a world class airline and the expansion of
its domestic network with the additional frequencies and by linking cities with expanding
potential. It is increased by it is daily seats development on the domestic network by 2% per
day by 2018.
Globalvect
Global Vectra heliport limited is India largest private helicopter company. With a fleet of 29
air craft ranging from small light helicopters to medium sized twin engine helicopters seating
4 to 15 passengers. Globalvect is head quartered at Mumbai, India. It is off shore wing services
the oil and gas industry with forward bases at Rajahmundry. The onshore operation, covering
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the entire Indian subcontinent, is based in New Delhi and Bangalore. Globalvect is listed on
national stock exchange and the Bombay stock exchange.
General aviation covers a huge range of activities, both commercial and non-commercial,
including private flying, flight training, air ambulance, police aircraft, aerial firefighting, air
charter, bush flying, gliding, and many others. Experimental aircraft, light-sport aircraft and
very light jet have emerged in recent years as new trends in general aviation.
Types of Aviation
They are few types of Aviation. They are mentioned below.
 Military Aviation
 Civil Aviation
 Private aviation
 General Aviation
Military Aviation and its introduction on the aircraft industry

Military aviation is the use of aircraft and other flying machines for the purposes of conducting
or enabling warfare, including national airlift capacity to provide logistical supply to forces
stationed in a theater or along a front. The wide variety of military aircraft includes bombers,
fighters, fighter bombers, transports, trainers, and reconnaissance aircraft. These varied types
of aircraft allow for the completion of a wide variety of objectives. Many automatic devices
assist the crews in obtaining results not achievable by human means. Machines can carry out
many tasks including locating, tracking, and destroying targets.
Civil Aviation
Civil Aircraft is a rather big group of aircraft. It refers to all non-military flights and activities
in aviation. Civil Aviation is one of the two major categories of flying, representing all non-
military aviation both private and commercial. Most of the countries in the world are members
of the international civil Aviation organization and work together to establish common
standards .all scheduled air transport is commercial, but general aviation can be either
commercial or private. Normally the aircraft and operator must all be authorized to perform
commercial operations through separate commercial licensing and operation certificates.
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Private Aviation
Private aviation is the part of general aviation that involves flying not for hire. In a private
flight, the pilot is not paid, and the aircraft owner or operator does not receive money for the
flight. In many countries, private aviation operates to less strict standards than commercial
aviation. Private pilots normally are not required to demonstrate the same level of proficiency
on their flight tests, and take fewer and less rigorous medical examinations. Many small aircraft
are private planes.
General Aviation
General Aviation refers to all civil flights other than scheduled airline flights, both private and
commercial. General aviation flights range from gliders and powered parachutes to large, non-
scheduled cargo jet flights. Because of the huge range of activities. General aviation may
include business flights, private aviation, flight training, ballooning, parachuting, gliding, hang
gliding, aerial photography, foot-launched powered hang gliders, air ambulance, crop dusting,
charter flights, traffic reporting, police air patrols, forest fire fighting, and many other types of
flying.
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Need for the study
India is poised to emerge as the fifth largest economy in the world this year with the increasing
global trade and economic activity in India, civil aviation industry in India has emerged as on
the fastest growing industries in the country during last 3 years. It is expected to become the
3rd largest aviation market in terms of number of passengers by 2024. Given these statistics and
growth in domestic passengers and domestic traffic and international air craft movement and
increasing number of operational airports and 100% FDI under automatic route. Aviation
industry is expected to witness Rs.35000 crores investment in the next four years. Even the
Indian government is planning to invest 1.83 US billion dollars in airport infrastructure
development in the coming 5 years, though the scenario is green in the aviation companies
and aviation stocks are suffering from volatility in their performance. This study
contemplates to find out the reasons over the bottle necks and the intermittent lack luster
performance. The study will also suggest the measures to overcome the challenges faced by
the aviation industry.
Objectives of the study
 To study the current state of aviation industry in India and its future prospects
 To study the stock price movement in Aviation Industry
 To measure the performance of aviation industry through risk return analysis of aviation
stock
 To offers suggestions for better improvement
Research methodology
The study is based on primary data and secondary data is are considered in this study. The
primary data is collected through interviews and discussions. The secondary data is collected
through websites, books, journals and review of literature. Equity share price data of aviation
industries has been collected for five years. The data is collected mainly through websites for
the period of five years. 1April 2014- 31 march 2019. The tools and techniques used for the
purpose analysis are standard deviation, risk return analysis.
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Scope of the Study
The study covers the investment patterns in equity of aviation industry for the period of five
years from 1 April 2014 - 31 March 2019. Equity shares prices of Spice jet, Indigo, Jet airways,
Globalvect have been considered for the purpose of analysis. The study focuses on aviation
industry analysis and price movements of Indian equity stocks of aviation industry.
Limitations of the study
 The study is confined to only aviation industry.

 The data for the study considered for five years from 1st April to 31st March 2019 so,
analysis restricted to that period only.
 The study is restricted to four companies.
 Suggestions and conclusion are based on the limited data for five years.
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Chapter – 2
Review of Literature
Review of literature
This chapter presents the plan of the research and details of the present researcher like, problem
statement, population, sample, nature, scope, and type and research design of the study.
Gupta (1972), the working of stock exchanges in India and has given a number of suggestions
to improve its working. The study highlights the need to regulate the volume of speculation so
as to serve the needs of liquidity and price continuity. It suggests the enlistment of corporate
securities in more than one stock exchange at the same time to improve liquidity. The study
also wishes the cost of issues to be low, in order to protect small investors
Cohen, Ness, Okuda, Schwartz and Whitcomb (1976), worked on The Determinants of
Common Stock Returns Volatility: An International Comparison” They studied the issue of
thinness is of interest for a number of reasons. They found that the most obvious re changes in
the fundamental determinants of share price and of a firms business and financial risk. They
attempted to account for this by distinguishing between random traders included demand shifts
and demand shifts induced by the receipt of new and generally available information
concerning a stock’s value. They also studied the differences in trading arrangements might
explain some of the volatility differences especially internationally.
Panda (1980), has studied the role of stock exchanges in India before and after independence.
The study reveals that listed stocks covered four-fifths of the joint stock sector companies.
Investment in securities was no longer the monopoly of any particular class or of a small group
of people. It attracted the attention of a large number of small and middle class individuals. It
was observed that a large proportion of savings went in the first instance into purchase of
securities already issued.
In a unique work of its kind, L.C. Gupta (1980), examined the characteristics of the rates of
return on equities in the Indian capital market for a fairly large sample of 276 companies over
a sixteen year period from 1961-76. He concluded that the rates of return provided by equities
are unsatisfactory because: a) about 20% of returns for various holding periods are negative,
b) the returns provide only a partial hedge against inflation. While the study is an important
milestone in research in Indian capital market, given the equity cult that started after forced
dilution by MNCs because of FERA in the late seventies and the rise in the equity returns since
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the second half of eighties, the conclusions of the study are unlikely to be valid now for the
Indian market. A comprehensive study of that kind for the more recent period is called for.
Golbe, Devra (1986), argued that there is a positive relationship between profitability and
safety in the transportation industries. The study analyses a model of safety provision under
uncertainty and tests the model using data from the US airline industry. Theory suggests that
the sign of the relationship between profits and safety is indeterminate and depends on risk
preferences and the structure of costs and demand. The empirical investigation suggests that
safety and profits have no significant relationship. Thus, it does not appear that profit-reducing
changes in regulation will lead to less safe airlines.
Varma Venkateshwaran (1990), explored the relationship of the Indian stock markets as
reflected by the Bombay Stock Exchange Index, vis-a-vis other prominent international stock
markets. Twenty three international stock indices are used over the period 1983-87. He
concluded that there was practically no meaningful relationship between the BSE index and
other international stock market indices, though the British and South Korean indices are
inversely related to BSE.
Siegmund, Fred (1990), examined the US airline industry ten years after the US Airline
Deregulation Act of 1978. A brief review of the historical background of regulation and the
changes leading to the Airline Deregulation Act is presented. A number of studies are cited to
show that airline performance has improved since the Civil Aeronautics Board days. With these
conclusions, goes on to suggest that it is time to begin comparing the airline industry today
with the standard of performance associated with perfect competition instead of the previous
regulatory period. A standard of competitive performance is suggested. The traditional
standards of performance is complicated because its variables decline for any airline flight until
the plane is full or has a 100 per cent load factor.
Mayya (1991), made an overview of the Indian capital market. He examined various aspects
of Indian Capital Market. The study emphasized the need for modernization and
computerization for providing liquid and efficient market. His study reveals that though Indian
stock market has attained a remarkable degree of growth in last one decade, but has still to go
a long way.
Gupta (1992) in his book concluded that an Indian stock market is highly speculative. Indian
investors are dissatisfied with the service provided to them by the brokers. Margins levied by
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the stock exchanges are inadequate and liquidity in a large number of stocks in Indian markets
is very low. While evidently a careful work, the conclusion except about margin system by the
stock exchanges are adequate and other two options built on wrong or questionable arguments.
Concluded that, a) Indian stock market is highly speculative; b) Indian investors are dissatisfied
with the service provided to them by the brokers; c) margins levied by the stock exchanges are
inadequate and d) liquidity in a large number of stocks in the Indian markets is very low.
Dillon (1993), in his doctoral dissertation studied the regulatory policies of Bombay Stock
Exchange over a four year period (July 1986 - June 1990). His findings show that regulatory
authorities decide changes in their margin policy on the basis of market activity. He found that
the margins were prompted by changes in settlement returns, price volatility, trading volume
and open positions. Granger causality results show that there is limited causality in the reverse
direction: margin changes do not affect returns, and have only a limited impact on price
volatility, trading volume and open positions.
Kim, Han; Singal, Vijay (1993), examined price changes associated with airline mergers
during 1985-1984, a period of natural experimentation in which mergers were not contested by
the government. The results show that prices increased on routes served by the merging firms
relative to a control group of mutes unaffected by the merger. Mergers may lead to more
efficient operations. But on the whole, the impact of efficiency gains on airfare is more than
offset by exercise of increased market power.
Chaplinsky and Hansen (1993), suggest that the indifferent stock market reaction is partly on
account of market expectation of debt issues. They find significant negative stock price reaction
to debt issue announcement after controlling for market expectations. However, the fall in price
in case of debt issue announcements has been found to be lower than that of fall in the case of
stock issue offerings.
Barton, Clive; Bradshaw, Lar; Brunschwiler, Remo; Bull Larsen, Thomas (1994), report
on the state of the airline industry in Europe, focus on financial difficulties national airlines are
facing that may be alleviated by the approaching deregulation. It is suggested that non-
European airlines, such as those based in North America, are beginning to dominate European
markets because they have the private funding to offer services national airlines cannot afford
to offer. European airlines will have to improve marketing and data processing functions after
deregulation if they want to regain their competitive advantage.
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Handa (1995), made a comparison of practices in developed markets and developing markets.
According to him it is in the developed markets of the west that business trends, trade cycles
and a host of other factors are taken care of by computers and forecasting models. This
information was backed by decades of diligently stored data. He also found that the situation
back home was materially different and the company reports are available six months after the
year ends which lose relevance by the time they are analyzed.
Amanulla & Kamaiah (1995), conducted a study to examine the Indian stock market
efficiency by using Ravallion co integration and error correction market integration
approaches. The data used are the RBI monthly aggregate share indices relating five regional
stock exchanges in India, viz Bombay, Calcutta, Madras, Delhi, Ahmedabad during 1980-1983.
According to the authors, the co-integration results exhibited a long-run equilibrium relation
between the price indices of five stock exchanges and error correction models indicated short
run deviation between the five regional stock exchanges. The study found that there is no
evidence in favour of market efficiency of Bombay, Madras, and Calcutta stock exchanges
while contrary evidence is found in case of Delhi and Ahmedabad.
Pattabhi Ram.V. (1995), emphasized the need for doing fundamental analysis and doing
Equity Research (ER) before selecting shares for investment. He opined that the investor
should look for value with a margin of safety in relation to price. The margin of safety is the
gap between price and value. He revealed that the Indian stock market is an inefficient market
because of the absence of good communication network, rampant price rigging, and the
absence of free and instantaneous flow of information, professional broking and so on. He
concluded that in such inefficient market, equity research will produce better results as there
will be frequent mismatch between price and value that provides opportunities to the long-term
value oriented investor. He added that in the Indian stock market investment returns would
improve only through quality equity research.
Menon (1996) a member of the Cochin Stock Exchange spoke about market making. In his
opinion, good market making is essential not only for inactive securities, but also for
moderately active and daily traded securities. Such an activity will need the support of banking
system and also co-operation from listed companies. He further pointed out that because of
varying market sentiments and changing investor perceptions there will always be mismatch
between buying and selling orders of investors in respect of any security on any given day in
16
the market terms of timing and quantity. This leads to buying orders remaining unexecuted on
the one hand and poor liquidity for those who wish to disinvest on the other hand.
Ahmed (1996), worked on the development of stock exchanges in developing countries with
special reference to the working and performance of Kuwait Stock Exchange. He found that
Kuwait Stock Exchange enjoys an independent judicial personality. The Stock Exchange
within its activity act to direct and rationalize dealing in stocks and securities, within the scope
of its powers in order to develop and stabilize dealing in securities in a manner securing safe,
easy and accurate transactions so as to avoid any confusion in dealings. The Stock Exchange
staff is developing the systems and the methods of dealing in securities, besides introducing
modern techniques such as those applied in advanced stock markets for the purpose of
achieving a sound financial position for the KSE on both, regional and international levels.
Debjit Chakraborty (1997), in his study attempts to establish a relationship between major
economic indicators and stock market behaviour. It also analyses the stock market reactions to
changes in the economic climate. The factors considered are inflation, money supply, and
growth in GDP, fiscal deficit and credit deposit ratio. To find the trend in the stock markets,
the BSE National Index of Equity Prices which comprises 100 companies was taken as the
index. The study shows that stock market movements are largely influenced by, broad money
supply, inflation, C/D ratio and fiscal deficit apart from political stability.
Madhusudan (1998), found that BSE sensitivity and national indices did not follow random
walk by using correlation analysis on monthly stock returns data over the period January 1981
to December 1992.
Liu, Zinan; Lynk, (1999), states that airline deregulation in the USA was a rejection of
inefficient regulation and inspired by the perspective of both potential and actual competition
in the industry. Using multivariate regression and efficiency frontier techniques, the emergent
structure of unregulated airline markets are assessed. The findings based on panel data for
major United States airlines during the period 1984-1991, indicate that (1) as a result of
successful efforts by airlines to reduce the scope for competition, aviation technology now
exhibits increasing rather than constant returns to network size as predicted by cost studies
prior to deregulation; (2) deregulation failed to produce evidence of efficiency convergence
among carriers as would be expected under sufficiently competitive conditions.
17
Krishnamurti (2000), worked on a paper titled “Competition, Liquidity and Volatility- A
Comparative Study of Bombay Stock Exchange and National Stock Exchange.” He stated that
India has to major stock exchanges: BSE and NSE. There are important differences in
ownership structure, geographical reach, internal control systems and institutionalized risk
management facilities between the BSE and NSE. For examining if these significant structural
differences between these stock exchanges contribute to variations in observed measures of
quality of markets. He used a paired comparison approach and document significant differences
in liquidity and price volatility between the two markets. He found that NSE is superior in his
department on many counts. The reputation of surveillance system in NSE is better too. NSE
adopts a completely order driven system while BSE has a system that is part order driven and
part quote driven. Both exchanges have price stabilization features.
Clougherty, Joseph (2001), analyzed that the globalization literature question national
autonomy in a world where MNEs spur increased international flows of capital and trade. This
study empirically tests whether globalization undermines the autonomy of domestic airline
competition policy. A comprehensive panel data set, covering twenty one nations over 1983-
92 periods, yields two major findings: (1) globalization undermines domestic airline
competition policy autonomy; (2) government institutions mediate globalization's impact.
Gupta (2002), studied the Performance Evaluation of National Stock Exchange of India. She
found that National Stock Exchange has played the catalytic role in bringing about these
transformations. The processes and procedures set by National Stock Exchange marked a
paradigm shift in the securities market. The relative importance of various stock exchanges in
the market has undergone dramatic change during last decade (1990’s). National Stock
Exchange in October 1995, within the first year of its operations became the largest exchange
in terms of volume transacted.
M. Radha (2003), compared the capital structure and profitability of Indian Airlines and Air
India. The study found that return on capital employed, liquidity and turnover were positively
associated with debt equity ratio. The study suggested that both the corporations should try to
use less interest bearing loans.
Cappel, Sam, Pearson, Terry, Romero, Eric Research (2003), based on Porter's typology of
strategic groups (Cappel, Tucci & Wyld, 1996) indicated that the most successful US based
airlines at that time belonged to the strategic group that employed a strategy combining
elements of low-cost and differentiation. Later, as deregulation of the industry was introduced
18
in Europe, it was found that superior financial performance was achieved by European airlines
that employed a singular low-cost approach. After the events of September 11, 2001 it appears
that the most successful US airlines in terms of financial performance are those adopting a low-
cost approach. The theoretical question to be examined is whether recent events creating
disequilibrium within the industry have resulted in temporary or permanent changes in the
relationship between financial performance and generic strategy choice.
Elliott, Terry Lin (2003), report that case of severe passenger demand disruption and
economic downturn, some airline companies react by disregarding revenue management tactics
in favour of simply slashing capacity in hope of gradually growing back load factors. With
luck, the company can maintain market share and generate acceptable cash flows. The study
contends that there are strategic reasons for rejecting this short sighted view. Revenue
management, as the executor of the commercial plan, retains that pivotal role even when the
plan is in crisis mode. This study presents that eight specific tactics can be used with success
in the down phase of the business cycle. The study describes how revenue management can
contribute substantially to cost savings and revenue maximization, while helping to maintain
quality in the midst of deep cutbacks in flight operations and staff.
Richard Hollowell (2003), focuses on how the financial difficulties facing the air travel
industry are also affecting secondary enterprises. The study stated that the airline industry has
a significant percentage of small businesses making between $10 and $75 million in annual
sales, and these businesses have been experiencing great difficulty in retrieving loans after
large financial institutions redlined the airline industry. The study mentions that smaller airlines
are looking for partners to merge with because replacement financing is hard to obtain.
Jarach, David (2004), states that the last couple of years have proved to be very tough for the
airline industry. Macroeconomic turmoil like 9/11, consequent economic recession, the threat
of terrorism and the SARS virus have all had a combined drastic effect on both volumes and
values of traffic performed by the industry. Microeconomic and industry related changes, most
definitively the dramatic growth of market power of Low-Cost Carriers (LCCs), are haloing
this condition of the airline environment, putting into deep crisis the incumbents' traditional
business models and giving life to liquidity losses, huge deficits and bankrupts. In the United
States market, Low Cost Carriers have been a reality since the early 1970s and have been
counterattacked many times, with scarce luck, by incumbent network carriers. In the European
environment, instead, Low Cost Carriers attack is fresher and the ultimate answers by national
19
carriers are still to be put into practice. The risks of in action, however, are probably stronger
than in the United States, due to the higher fragmentation of the European industry and the
States' ownership of many carriers that still prevent radically invasive market reactions like
mergers. After an introductory but compulsory parenthesis on the rise of the low-cost
phenomenon in the airline industry, the study aims to analyse the new market scenario for the
airline industry, focusing on the European context. The study will analyse the main marketing
tactics UE carriers might adopt to cope with the huge wave of low-cost entities and survive in
the current tough environment.
Anderson, William; Shah, Amit (2004), analyzed the terrorist attacks of September 11, 2001,
had a hugely negative effect upon the airline industry. However, because of their direct
involvement in the terrorist attacks, two airlines were especially vulnerable in the aftermath of
the disaster: American Airlines Inc. (AA) and United Airlines Inc. (UAL). This study examines
the stock market effects upon AA and UAL to see if the markets punished them more severely
than the rest of the airline industry. It has been found that market reactions to airline crashes
were different depending upon whether or not the airline involved in the crash was seen to be
at fault or not. Airlines that were not seen to be at fault did not suffer in the markets as badly
as did airlines that clearly were liable for the crashes. The study emphasizes that the September
11 attacks were not the only factor in the financial problems faced by the airlines.
Loudon, Geoffrey (2004), studied important financial risks facing the airline industry
including interest-rate, currency and fuel-price risk. This study estimates the exposure to these
risks within the airline industry of Australia and New Zealand, using both linear and non-linear
specifications, for a variety of horizon lengths. Evidence of exposure, both symmetric and
asymmetric, tends to strengthen as the return horizon is lengthened. Exposure to these financial
risks is largely unchanged by the terrorist attacks and the collapse of a major competitor in
September 2001.
Thacker, Shardul (2005), informs that last year has seen a phenomenal leap in the Indian
airline industry, with a number of small, low cost, no-frills airlines being floated on the stock
exchange, leading to a growing demand for passenger aircraft, most of which are imported into
India. Under a recent directive, the Reserve Bank of India permits authorized dealers in foreign
exchange to remit up to $ 1 million per aircraft towards the security deposit, for the payment
of lease rentals, with the lesser for import of aircraft, aircraft engines or helicopters. The
20
remittance permitted must be in accordance with the Policy on Advance Remittances approved
by the board of directors of the bank.
Naresh Goyal, Chairman Jet Airways (2005), states that travel and tourism account for 5.5%
of the country’s employment. The ground reality is that only a very small proportion of Indians
travel by air and if airlines restrict themselves to this market, it would imply tapping a very
small fraction of the total market. The study states that Indian carriers can compete with the
best in the world and contribute significantly to the promotion of tourism in India supported by
the right policies, good infrastructure and correct operating environment. The study concludes
by stating that the empowerment of India in the travel and tourism segment would take place
only when Indian carriers demonstrate to the world, the performance standards that India is
capable of.
Bisignani, Giovanni (2006), presents that the global commercial airline industry is doomed,
as a result of bankruptcies, terrorism and high oil prices. The study views that the global
economy cannot function without air travel. It is suggested that a complex mix of factors has
led to the industry's current state of financial crisis, but that the crisis can be remedied. Safety
statistics related to the commercial airline industry are reviewed. According to the author,
airlines do not need handouts, special treatment, or government subsidies in order to survive.
Tourism Australia (2006), gives a brief overview of the Indian aviation market as viewed by
an outsider and access to foreign countries. It discusses the performances of the government-
owned airlines Air India, and Indian airlines and also the private airlines such as Air Deccan,
Jet Airways, Air Sahara, Singapore Airlines and Jet Star Asia. The study states that there is a
dramatic reform underway in Indian aviation with India’s increasing liberalization, strong
economic performance and fast growing passenger demand creating many opportunities but
also problems such as pilot shortages and airport infrastructure limitations.
Siddhartha Butalia, Ashish Dhawan, Nidhi Mishra, Nithya, Payal Yadav, Rajesh and
Siddharth Dahiya (2006), present an in depth study of the Indian aviation industry with its
cargo traffic, passenger traffic and air traffic along with the history of Indian aviation. The
study discusses the need for open sky policy in India and privatization in civil aviation industry.
It analyses the levels of infrastructure at all the Indian airports and the major players in Indian
aviation. It further discusses the various inputs such as fuel prices, labour, operation costs,
leasing costs and capital costs in the aviation industry. The study features the market structure
and its implications, market share concentration and pricing mechanisms. The study concluded
21
by studying the trends in international and domestic civil aviation, the study of consumer
demand, doing a SWOT analysis of legacy carriers and recommendations given by government
on code sharing.
Saroj Datta, Executive Director, Jet Airways (2006), summarizes that the future of Indian
aviation industry is very bright and promising with a huge potential for growth. It also discusses
the various growth factors that are acting as catalysts to drive the Indian aviation industry. The
study discusses the entry of private airlines such as Jet Airways, Air Sahara (acquired by Jet),
and Air Deccan in the Indian domestic market in direct competition with the state-owned Indian
Airlines and the entry of other private carriers such as King Fisher, Spice Jet, and Go Air. The
study analyses the customer segmentation features in the private airlines and discusses the
scope for low-cost airlines and future challenges. It points out the government policy decisions
on open sky policy and their impact. The study states that Indian aviation will make a
significant contribution to the country’s rapid economic growth and connectivity.
Ravi Kumar (2006), focuses on the challenges facing the Indian aviation industry. The study
discusses the growing air traffic trends in the Indian Aviation sector and therefore states that
the need for technological up gradation is an urgent requirement. The study also discusses the
major challenges ahead in the aviation industry such as shortage of trained personnel,
inadequate infrastructure and high taxes and tariffs. The study also states that radical steps on
a priority basis are needed to improve the infrastructure of at least the major airports. There is
a pressing need to train more personnel in order to overcome the shortage of pilots, cabin crew
and maintenance staff. There is also an urgent need for reducing the high taxes on Aviation
Turbine Fuel (ATF) and reducing the landing charges and bringing them on a par with those
prevailing globally to make the Indian aviation industry more competitive.
Satish and Surrender Vaddepalli (2006), focused on the growth prospects in the Indian
aviation industry and new measures like permitting foreign capital, lowering of the entry
barriers and allowing the private airlines to fly to foreign shores. The growth in passenger
traffic has led to demand surpassing supply. Several steps have been taken by the government
to cope with the demand, such as relaxing the required number of hours of flight for issuing
license to pilots, increasing the number of candidates in Indira Gandhi Aviation Academy,
raising the age limit for pilots from 60 to 61 and allowing the airlines to hedge on fuel prices
to minimize the increasing bills of ATF. The study concludes that Indian aviation industry
needs to increase its own funds to reduce its financial burden and thereby, the downside risk
22
during bad times. The study has a value addition “Government Policies in Civil Aviation”
which highlights the phased liberalization approach of the government in the civil aviation
industry in India.
Flouris, Triant; Walker, Thomas (2007), examined the accounting and stock price
performance of two Canadian airlines, West Jet and Air Canada, over a five year period, taking
into account the aftermath of the systemic shock to the airline industry produced by the
September 11, 2001 (9/11), terrorist attacks and subsequent events such as the 2002 SARS
outbreak, the wars in Afghanistan and Iraq, and the accompanying rise in jet fuel prices. The
study focuses on the viability of low-cost versus conventional-cost business models in Canada
under the current business environment and the ability of airlines to withstand and effectively
respond to catastrophic industry events. Furthermore, the study links the effectiveness of the
airlines' responses to these events and specific elements of their respective business models.
The study tests the hypothesis through a case study. It focuses on West Jet as a typical low-
cost airline and compares its accounting and stock performance to Air Canada, a legacy carrier
and rival in several business sectors. It found West Jet to be much less affected by catastrophic
industry events. By decomposing each airline's return volatility, it is observed that West Jet's
systematic and unsystematic risk increased only slightly during the industry's post-9/11 turmoil
when compared to Air Canada. In addition, both West Jet's accounting and stock performance
have been highly superior to those of Air Canada. The study argues that West Jet's business
model provides the firm with significantly more financial and operational flexibility than its
legacy rival, Air Canada. West Jet's lower operating costs, high consumer trust, product
offering, corporate structure, workforce and work practices, as well as operational procedures
are all factors that appear to contribute to its relative success.
Daan Struyven (2008) studied on the battle between the Bombay Stock Exchange and the
National Stock Exchange. He compared BSE and NSE on various aspects like, Impact of
technology on transaction costs and access, Governance & Management, Product scope,
Geographical reach. He found that national stock exchange surpassed Bombay stock exchange
on the equity segment in only 12 months because of 4 main raisons. First of all, non Gujarati
traders and or investors with low needs to be part of the Gujarati financial community were
predominantly attracted by the fee structure and customer oriented clearing, settlement and
dematerialization processes of national stock exchange. Secondly, traders, investors and public
policy makers with an important long run financial and or political interest to transform the
Indian equity market into a competitive and attractive market were attracted by this potential
23
to reshape the market and by the fee structure and the customer oriented clearing, settlement
and dematerialization processes of national stock exchange . Thirdly, traders and or investors
who originally used brokers become member of national stock exchange because of the
possibility to trade electronically outside Bombay. Fourthly, price differences attracted
arbitrage traders who supported liquidity at both exchanges.
Juhi Ahuja (2012), presents a review of Indian Capital Market & its structure. In last decade
or so, it has been observed that there has been a paradigm shift in Indian capital market. The
application of many reforms & developments in Indian capital market has made the Indian
capital market comparable with the international capital markets. Now, the market features a
developed regulatory mechanism and a modern market infrastructure with growing market
capitalization, market liquidity, and mobilization of resources. The emergence of Private
Corporate Debt market is also a good innovation replacing the banking mode of corporate
finance. However, the market has witnessed its worst time with the recent global financial crisis
that originated from the US sub-prime mortgage market and spread over to the entire world as
a contagion. The capital market of India delivered a sluggish performance.
24
Chapter – 3
Company and
Industry Profile
INDUSTRY PROFILE
India is the 9th largest aviation market in the world with a size of around US$ 16 billion and is
poised to be the 3rd biggest by 2020. Indian aviation industry promises huge growth potential
due to large and growing middle class population. Rapid economic growth, higher disposable
incomes, rising aspiration of the middle class and overall penetration levels.
Civil aviation industry in India is experiencing a new era of expansion driven by the factors
such as low cost carries, modern airports, and foreign direct investment in domestic airlines
cutting edge information technology interventions and growing emphasis on regional
connectivity. Civil aviation sector has been growing steadily registering a growth of 13.8%
during the last 10 years .The air transport in India has attracted FDI of over US$ 569 million
from April 2000 to February 2015.
The Indian airports have a combined capacity to cater to 220.04 million passengers and 4.63
million tonnes cargo per annum and handled 168.92 million passenger and 2.28 million tonnes
cargo in 2013-14. As per estimates, passenger traffic at Indian airports is accepted to increase
to 450 million by 2020 from 159.3 million in 2012-2013.
Indian domestic air traffic is accepted to cross 100 million passengers by FY 2017. Compared
to 81 million passengers in 2015, as per centre for Asia pacific aviation. India is among the
five faster growing aviation markets globally with 275 million new passengers. The airlines
operating in India are projected to record a collective operating profit of Rs.8, 100 crores
(US$1.29 billion) in fiscal year 2016.
Over the next decades, India undoubtedly has the potential to become a significant part of the
global aerospace supply chain an India offers and cost advantages of between 15 to 25 per cent
in manufacturing, together with its large procurement appetite.
The civil aviation industry in India has emerged as one of the fastest growing industries in the
country during the last three years. India is currently considered the third largest domestic civil
aviation market in the world. India has become the third largest domestic aviation market in
the world and is expected to overtake UK to become the third largest air passenger market by
2024. India has 91 international carriers comprising of 5 Indian carriers and 86 foreign carriers,
which ensure that India is well connected with most major countries. Revenue passenger
25
kilometer in domestic airline demand growth of 18.6% in 2018 was three times the global RPK
growth of 6.5%.
 Indian carriers are projected to increase their fleet size to 1,100 aircraft by 2027.
 Freight traffic on Indian airports is expected to cross 11.4 MT by 2032.
 Government agencies projects requirement of around 250 brownfield and green-field
airports by 2020.
 India is the fastest-growing aviation market and is expected to cater to 520 million
passengers by 2037.
 India has been projected to be the second-fastest-growing country in the world for
passenger traffic by the Airports Council International in its traffic forecasts from
2017-40.
 Demand for aircraft in India is expected to be 1,750 by 2037.
Industry Scenario
The Aviation sector in India currently contributes $72 billion to GDP. India has 464 airports
and airstrips, of which 125 airports are owned by Airport Authority of India. These 125 Airport
Authority of India airports manage close to 78% of domestic passenger traffic and 22% of
international passenger traffic.
During January - august 2016, domestic air passenger traffic rose 23.14 per cent to 64.47
million from 52.36 million during the same period in 2015. Passenger traffic during FY 2015-
16 increased at a rate of 21.3 per cent to 85.57 million from 70.54 million in the FY 2014-15.
In July 2016, total aircraft movements at all Indian airports stood at 1, 68,400 which was 14.3
per cent higher than July 2015. International aircraft movements increased by 8.2 per cent to
32,830 in July 2016 from 30,330 in July 2015. Domestic aircraft movements increased by 15.8
per cent to 1, 35,570 in July 2016 from 1, 17,050 in July 2015.
Passenger traffic in India stood at 316.51 million during April 2018 - Feb 2019. Out of which
domestic passenger traffic stood at 252.92 million while international traffic stood at 63.59
Million. The aircraft movement, passenger traffic and freight traffic increased by 4.9%, 4.5%
and 3.1% respectively in February 2019 viz-a-viz February 2018, across all Indian airports
taken together.
26
However, the share of international cargo traffic is much higher at 68.5% in comparison with
31.5% of domestic cargo traffic. Maintenance, Repair & Overhaul industry is expected to grow
to $1.2 billion by 2020 from $950 million currently.
Market Size
India’s passenger traffic stood at 199.60 million in FY20 April-October 2019. Where domestic
passenger traffic reached 160.16 million and International passenger reached 39.43 million. In
FY20 April - October 2019, domestic freight traffic stood at 0.80 million tonnes, while
international freight traffic was at 1.20 million tons. India’s domestic and international aircraft
movements reached 1.24 million and 0.25 million in FY20 April-October 2019, respectively.
India is the world's third-largest domestic and overall civil aviation market. The number of air
passengers grew 16.3% annually from 14 million in 2000–01 to 135 million in 2015-16, both
domestic and international .It recorded an air traffic of 131 million passengers in 2016,
estimated to be 60 million international passengers by 2017. The market is also estimated to
have 800 aircraft by 2020.
In 2015, being projected India's demand for aircraft to touch 1,740 or 4.3% of global volume,
valued at $240 billion, over the next 20 years in India. Data from IATA shows that India
registered the highest domestic load factor of 87.8% across the top seven aviation markets by
March 2018. Making flying accessible and affordable under the UDAN scheme, there has been
a commendable increase of 242% in air passenger traffic on Regional Connectivity Scheme
routes, from April 2018 - April 2019.
To cater to the rising air traffic, the Government of India has been working towards increasing
the number of airports. As of March 2019, India has 103 operational airports. India has
envisaged increasing the number of operational airports to 190-200 by FY40. Further, the rising
demand in the sector has pushed the number of airplanes operating in the sector. As of July
2018, there were nearly 620 aircraft being operated by scheduled airline operators in India. The
number of airplanes is expected to grow to 1,100 planes by 2027.
Growth rate
 Increase in the business class booking up to 75% YOY (2015-16) comparison for every
month increase in corporate activity.
 Increase in tourism
 International from 2014-2015 is 4.44%
27
Investment
According to data released by the Department of Industrial Policy and Promotion, FDI inflows
in India’s air transport sector including air freight reached US$ 1,904.37 million between April
2000 and June 2019. The government has 100 per cent FDI under automatic route in scheduled
air transport service, regional air transport service and domestic scheduled passenger airline.
However, FDI over 49 per cent would require government approval.
India’s aviation industry is expected to witness RS 35,000 crores (US$ 4.99 billion) investment
in the next four years. The Indian government is planning to invest US$ 1.83 billion for
development of airport infrastructure along with aviation navigation services by 2026.
Key investments and developments in India’s aviation industry include:
 As of December 2019, France based Safran Group is planning an investment of US$

150 million in a new aircraft engine maintenance, repair and overhaul unit in India to
cater to its airline customers.
 In November 2019, the Competition Commission of India approves the acquisition of
shareholdings in Mumbai International Airport Limited (MIAL) by Adani Properties
Private Limited.
 UK group to invest RS 950 crores (US$ 135.9 million) in Turbo Aviation's new airline
Thruster.
 AAI is going to invest RS 15,000 crores (US$ 2.32 billion) in 2018-19 for expanding
existing terminals and constructing 15 new ones.
 In June 2018, India has signed an open sky agreement with Australia allowing airlines
on either side to offer unlimited seats to six Indian metro cities and various Australian
cities.
 The AAI plans to develop Guwahati as an inter-regional hub and Agartala, Imphal and
Dibrugarh as intra-regional hubs.
 Indian aircraft Manufacture, Repair and Overhaul (MRO) service providers are
exempted completely from customs and countervailing duties
Government Initiatives
Some major initiatives undertaken by the government are:
 As per the Union Budget 2019-20, government will promote aircraft financing and
leasing activities to make India's aviation market self-reliant.
28
 In February 2019, the Government of India sanctioned the development of a new
Greenfield airport in Hirasar, Gujarat, with an estimated investment of RS 1,405 crores
(US$ 194.73 million).
 As of January 2019, the Government of India is working on a blueprint to promote
domestic manufacturing of aircrafts and aircraft financing within the country.
 In January 2019, the government organized the Global Aviation Summit in Mumbai
which witnessed participation of over 1,200 delegates from 83 countries.
 In January 2019, the Government of India’s released the National Air Cargo Policy
Outline 2019 which envisages making Indian air cargo and logistics the most efficient,
seamless and cost and time effective globally by the end of the next decade.
 In November 2018, the Government of India approved a proposal to manage six AAI
airports under public private partnership. These airports are situated in Ahmedabad,
Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru. AAI received 32
technical bids from ten companies.
 In February 2018, the Prime Minister of India launched the construction of Navi
Mumbai airport which is expected to be built at a cost of US$ 2.58 billion. The first
phase of the airport will be completed by end of 2019.
 The Government of Andhra Pradesh is to develop Greenfield airports in six cities-
Nizamabad, Nellore, Kurnool, Ramagundam, Tadepalligudem and Kothagudem under
the PPP model.
 Regional Connectivity Scheme has been launched.
Achievements
Following are the achievements of the government during FY18:
 Under RCS-Urban scheme, approximately 34, 74,000 passengers were flown, and 335
routes awarded during the year 2019 covering 33 airports
 As on October 2019, 55 AAI airports were declared as Single-Use Plastic Free Airport
Terminals.
 India is expected to have the largest number of aircraft flying by its scheduled airlines
latest by December 2019.
 Number of Operational Airports crossed 100 in FY19.
29
 In September 2018, Jharsuguda Airport in Odisha and Pakyong Airport in Sikkim were
inaugurated. Pakyong airport is Sikkim’s first ever airport and AAI’s first Greenfield
airport construction.
 In December 2018, Kannur International Airport was inaugurated making Kerala the
only state in India to have four international airports.
30
COMPANY PROFILE
Karvy is a premier integrated financial services provider, and ranked among the top five in
the country in all its business segments, services over 16 million individual investors in various
capacities, and provides investor services to over 300 corporate, comprising the who is who of
Corporate India. Karvy covers the entire spectrum of financial services such as Stock broking,
Depository Participants, Distribution of financial products - mutual funds, bonds, fixed deposit,
equities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services,
Merchant Banking & Corporate Finance, placement of equity, IPO’s, among others. Karvy has
a professional management team and ranks among the best in technology, operations and
research of various industrial segments.
The birth of Karvy was on a modest scale in 1981. It began with the vision and enterprise of a
small group of practicing Chartered Accountants who founded the flagship company Karvy
consultant limited. Company started with consulting and financial accounting automation, and
carved inroads into the field of registry and share accounting by 1985. Since then, they have
utilized their experience and superlative expertise to go from strength to strength to better their
services, to provide new ones, to innovate, diversify and in the process, evolved Karvy as one
of India’s premier integrated financial service enterprise.
Thus over the last 20 years Karvy has travelled the success route, towards building a reputation
as an integrated financial services provider, offering a wide spectrum of services. And we have
made this journey by taking the route of quality service, path breaking innovations in service,
versatility in service and finally totality in service. Their highly qualified manpower, cutting-
edge technology, comprehensive infrastructure and total customer-focus has secured for them
the position of an emerging financial services giant enjoying the confidence and support of an
enviable clientele across diverse fields in the financial world.
KARVY GROUP COMPANIES
(1) Karvy Stock Broking Limited

Karvy Stock Broking Limited is the one of the cornerstones of the Karvy edifice, flows freely
towards attaining diverse goals of the customer through varied services. Creating a plethora of
opportunities for the customer by opening up investment vistas backed by research-based
advisory services. Here, growth knows no limits and success recognizes no boundaries.
31
Helping the customer create waves in his portfolio and empowering the investor completely is
the ultimate goal.
Karvy is a Member of National Stock Exchange (NSE), The Bombay Stock Exchange (BSE),
and The Hyderabad Stock Exchange (HSE).
(2) Karvy Global Services Limited
The specialist Business Process Outsourcing unit of the Karvy Group. The legacy of expertise
and experience in financial services of the Karvy Group serves us well as company enter the
global arena with the confidence of being able to deliver and deliver well.
Here company offer several delivery models on the understanding that business needs are
unique and therefore only a customized service could possibly fit the bill. Karvy service matrix
has permutations and combinations that create several options to choose from.
Karvy is in re-engineering and managing processes or delivering new efficiencies, company’s

service meets up to the most stringent of international standards. Their outsourcing models are
designed for the global customer and are backed by sound corporate and operations
philosophies, and domain expertise. Providing productivity improvements, operational cost
control, cost savings, improved accountability and a whole gamut of other advantages.
Karvy operate in the core market segments that have emerging requirements for specialized
services. Their wide vertical market coverage includes Banking, Financial and Insurance
Services (BFIS), Retail and Merchandising, Leisure and Entertainment, Energy and Utility and
Healthcare.
(3) Karvy Commodities Broking Limited
At Karvy Commodities, they are focused on taking commodities trading to new dimensions of
reliability and profitability. They have made commodities trading, an essentially age-old
practice, into a sophisticated and scientific investment option.
Company enables trade in all goods and products of agricultural and mineral origin that
include lucrative commodities like gold and silver and popular items like oil, pulses and
cotton through a well-systematized trading platform.
32
The technological and infrastructural strengths and especially the street-smart skills make
them an ideal broker. Their service matrix is holistic with a gamut of advantages, the first and
foremost being their legacy of human resources, technology and infrastructure that comes
from being part of the Karvy Group.
Their wide national network, spanning the length and breadth of India, further supports these
advantages. Regular trading workshops and seminars are conducted to hone trading strategies
to perfection. Every move made is a calculated one, based on reliable research that is
converted into valuable information through daily, weekly and monthly newsletters, calls and
intraday alerts. Further, personalized service is provided here by a dedicated team committed
to giving hassle-free service while the brokerage rates offered are extremely competitive.
Karvy’s commitment to excel in this sector stems from the immense importance that
commodity broking has to a cross-section of investors & dash; farmers, exporters, importers,
manufacturers and the Government of India itself.
Achievements
 Among the top 3 stock brokers in India (4% of NSE volumes)
 India's No. 1 Registrar & Securities Transfer Agents
 Top most Depository Participants
 Largest Network of Branches & Business Associates
 ISO 9002 certified operations by DNV
 Among top 10 Investment bankers
 Largest Distributor of Financial Products
 Adjudged as one of the top 50 IT uses in India by MIS Asia
 Full Fledged IT driven operations
KARVY SERVICES
Equity Broking Services
Stock markets are considered unpredictable, but they reflect the mood of the economy. Over
the years, investment in equities is considered to be the best long-term wealth maximization
33
option. The gap between unpredictability and a safety anchor in the market is bridged by the
in-depth knowledge of market functioning and changing trends, planning with foresight and
choosing one’s options with care. From that perspective, our equity broking and advisory
services are beyond just a medium for buying and selling stocks and shares. Instead, we provide
services which are multi-dimensional and multi-focused in its scope.
Karvy can boast of the largest-owned network among financial-services companies in India.
This has ensured that wherever a potential customer is located, it is never too far from a Karvy
office. Given the wide network, there are a number of trading terminals that provide retail
stock-broking facilities. Our services have increasingly offered customer-oriented convenience
which we provide to a spectrum of investors—high net-worth or otherwise—with equal
dedication and competence.
Distribution of Financial Products

The paradigm shift from pure selling to knowledge-based selling drives the business today.
With our wide portfolio offerings, we occupy all segments in the retail financial services
industry. A highly qualified and dedicated team of professionals, drawn from the best of
academic and professional backgrounds, are committed to maintaining high levels of client
service delivery. This has propelled us to become one of the top distribution houses for equity
and debt issues, with an estimated market share of 15% in terms of applications and amount
mobilized.
Portfolio Management Services

Portfolio management services are meant for high net worth individuals or institutions who
want a personalized management of their finances. A team of expert professionals conduct
extensive research on markets to provide a customized solution to achieve unique investment
objectives. This ensures best selection of investment opportunity within an asset class and
active monitoring for optimized results. Investors are provided with an all-time access to track
their portfolios. Our PMS offerings range across two asset classes – Equity and Debt, with
multiple options for each asset class.
Karvy Fortune
Karvy Fortune, helps individuals and small organizations forge a partnership with Karvy which
is one of the largest financial services group serving over 60 million investors and provides
34
investor services to over 400 corporate houses in the country. Karvy Fortune already has a huge
network of franchisees, with presence in 330 cities, and a total of 787 business associates all
over India.
Karvy Fortune is constantly on the lookout for hard working, ambitious individuals who would
like to build a robust business without the usual hassles associated with starting an
enterprise. As a business partner of Karvy Fortune you get to be a part of an established broking
house, which is hugely successful in providing financial services to millions of customers. The
risk reward ratio for the individual/ enterprise becoming a franchisee is also very low
considering this is an already established business model and a brand name that has great value
in the financial markets in India.
35
Chapter – 4
Data Analysis and
Interpretation
DATA ANALYSIS AND INTERPRETATION
The data taken into consideration for the aviation stock performance for a period of 5years that
is 1stApril 2014 to 31st March 2019. The study is focused on four airlines stock price in India
they are Jet airways, Spice jet, Globalvect, Indigo. The data regarding monthly closing stock
price for each airlines company. This chapter deals with stock price movements by using tools
and techniques standard deviation and risk return analysis.
close price of current month−close price of pervious month

Return = × 100
close price of the pervious month
Total of returns
Average = No.of months
𝑫𝟐
Variance (𝜎2) = ∑
𝒏−𝟏
Standard deviation = √𝜎2
36
Table no: 4.1
Calculation of Risk Return analysis on Globalvect for the year ended
2014-2015
Close
Price Returns Average deviation d2
Month
16.7 - 11.78071 -11.7807 138.7851
Apr-14
21.7 29.94012 11.78071 18.15941 329.7642
May-14
38.6 77.88018 11.78071 66.09948 4369.141
Jun-14
35.85 -7.12435 11.78071 -18.9051 357.4013
Jul-14
60.6 69.03766 11.78071 57.25695 3278.358
Aug-14
79.95 31.93069 11.78071 20.14998 406.0219
Sep-14
74.2 -7.19199 11.78071 -18.9727 359.9635
Oct-14
66.85 -9.90566 11.78071 -21.6864 470.2986
Nov-14
67.7 1.271503 11.78071 -10.5092 110.4434
Dec-14
59.6 -11.9645 11.78071 -23.7453 563.8373
Jan-15
46.45 -22.0638 11.78071 -33.8445 1145.448
Feb-15
41.6 -10.4413 11.78071 -22.222 493.8192
Mar-15
141.369 12023. 3

Return = × 100
Average = Total of returns

No.of months
Deviation = Return – Average return
𝑫𝟐
Variance (𝜎2) = ∑ 𝒏−𝟏
𝜮𝑫𝟐 = 12023.3; N= 12
37
12023.3
Variance = 12−1
= 1093.027
Standard deviation = √variance
𝜎 = √1093.027
= 33.06
Close Price
90
80
70
60
50
40
Close Price
30
20
10
0
Figure 4.1
Closing price of Globalvect for 2014-2015
Interpretation
During the period of 12 months that is April 2014 – March 2015. The highest return of 77.88
% was obtained in June 2014 and lowest return of -22.06 % was obtained in February 2015.
The average return rate of return of Globalvect for 12 months period was 11.78. The standard
deviation as being calculated was 33.06.
38
Table No: 4.2
2015-2016
Close
Month
47.35 - 9.0119 -9.0119 81.21434
Apr-15
66.5 40.44351 9.0119 31.43161 987.9458
May-15
81.75 22.93233 9.0119 13.92043 193.7784
Jun-15
133.3 63.0581 9.0119 54.0462 2920.992
Jul-15
84.9 -36.3091 9.0119 -45.321 2053.991
Aug-15
81.6 -3.88693 9.0119 -12.8988 166.3797
Sep-15
107.6 31.86275 9.0119 22.85085 522.1611
Oct-15
94.2 -12.4535 9.0119 -21.4654 460.7648
Nov-15
109.95 16.71975 9.0119 7.707845 59.41088
Dec-15
110.6 0.591178 9.0119 -8.42072 70.90856
Jan-16
67.1 -39.3309 9.0119 -48.3428 2337.028
Feb-16
83.55 24.51565 9.0119 15.50375 240.3662
Mar-16
108.1428 10094.9

Return = × 100
Total of returns
𝑫𝟐
𝜮𝑫𝟐 = 10094.9; N= 12
39
10094.9
Variance = 12−1
= 917.718
𝜎 = √917.718
= 30.29
close price
140
120
100
80
60
close price
40
20
0
Graph No 4.2
Interpretation
% was obtained in May 2015 and lowest return of -36.30 % was obtained in August 2015. The
average return rate of return of Globalvect for 12 months period was 19.01. The standard
40
Table No: 4.3
2016-2017
Close Returns Average deviation d2
Month Price
- 3.562196 -3.5622 12.68924
Apr-16 81.6
-4.82143 3.562196 -8.38362 70.28516
May-16 79.9
1.813634 3.562196 -1.74856 3.057471
Jun-16 74.4
-4.48403 3.562196 -8.04623 64.74174
Jul-16 69.8
-15.627 3.562196 -19.1892 368.2256
Aug-16 62.4
13.10976 3.562196 9.54756 91.1559
Sep-16 64.4
30.52561 3.562196 26.96341 727.0255
Oct-16 73
-9.18947 3.562196 -12.7517 162.6049
Nov-16 73
-8.01592 3.562196 -11.5781 134.0527
Dec-16 78.7
31.5204 3.562196 27.9582 781.6609
Jan-17 80.6
2.067669 3.562196 -1.49453 2.23361
Feb-17 102.5
5.847145 3.562196 2.284949 5.220994
Mar-17 101.05
42.74635 2422.95

Return = × 100

No.of months
𝑫𝟐
𝜮𝑫𝟐 = 2422.95; N= 12
2422.95
Variance = 12−1
= 220.2681
41
𝜎 = √220.2681
= 14.84
Close price
140
120
100
80
60
close price
40
20
0
Graph No 4.3
Interpretation
During the period of 12 months that is April 16– March 2017. The highest return of 30.52 %
was obtained in October 2016 and lowest return of -15.62 % was obtained in August 2016. The
42
Table No: 4.4
2017-2018
Close
Returns Average deviation d2
Month Price
108 - 1.964487 -1.96449 3.859211

Apr-17
128.5 18.98148 1.964487 17.01699 289.5781
May-17
168.85 31.40078 1.964487 29.43629 866.4952
Jun-17
159.55 -5.50785 1.964487 -7.47233 55.83579
Jul-17
147.2 -7.74052 1.964487 -9.70501 94.18717
Aug-17
129.05 -12.3302 1.964487 -14.2947 204.337
Sep-17
174.6 35.2964 1.964487 33.33191 1111.016
Oct-17
173.55 -0.60137 1.964487 -2.56586 6.583648
Nov-17
176.2 1.526937 1.964487 -0.43755 0.19145
Dec-17
154.6 -12.2588 1.964487 -14.2233 202.3018
Jan-18
141.4 -8.53816 1.964487 -10.5027 110.3057
Feb-18
117.85 -16.6549 1.964487 -18.6194 346.6808
Mar-18
23.573855 3291.37

Return = × 100

No.of months
𝑫𝟐
𝜮𝑫𝟐 = 3291.37; N= 12
43
3291.37
Variance = 12−1
= 299.2154
𝜎 = √299.2154
= 17.29
Close price
200
180
160
140
120
100
80 close price
60
40
20
0
Graph No 4.4
Interpretation
During the period of 12 months that is April 2017 – March 2018. The highest return of 35.29%
was obtained in October 2017 and lowest return of -16.65 % was obtained in March 2018. The
44
Table No: 4.5
2018-2019
Close
Month
123.9 - -3.88822 3.888221 15.11826
Apr-18
105.3 -15.0121 -3.88822 -11.1239 123.7408
May-18
86.1 -18.2336 -3.88822 -14.3454 205.7904
Jun-18
92.45 7.375145 -3.88822 11.26337 126.8634
Jul-18
79.8 -13.6831 -3.88822 -9.79485 95.93911
Aug-18
62.85 -21.2406 -3.88822 -17.3524 301.1051
Sep-18
67.15 6.841687 -3.88822 10.72991 115.1309
Oct-18
69.45 3.425168 -3.88822 7.313388 53.48565
Nov-18
65.6 -5.54356 -3.88822 -1.65534 2.740137
Dec-18
58.9 -10.2134 -3.88822 -6.32519 40.00808
Jan-19
54.45 -7.55518 -3.88822 -3.66696 13.44658
Feb-19
69.25 27.1809 -3.88822 31.06912 965.2903
Mar-19
-46.6586 2058.66

Return = × 100

No.of months
𝑫𝟐
𝛴𝐷 2 = 5483.382; N= 12
45
2058.66
Variance = 12−1
= 187.1509
𝜎 = √187.1509
= 13.68
Close price
140
120
100
80
60
close price
40
20
0
Graph No 4.5
Interpretation
% was obtained in March 2019 and lowest return of -21.24 % was obtained in September 2018.
The average return rate of return of Globalvect for 12 months period was -3.88. The standard
46
Table No: 4.6
Calculation of Risk Return analysis on Jet airways for the year ended
2014-2015
Close
Month
251.15 - 6.831203 -6.8312 46.66534
Apr-14
241.45 -3.86223 6.831203 -10.6934 114.3496
May-14
253.95 5.177055 6.831203 -1.65415 2.736206
Jun-14
245.7 -3.24867 6.831203 -10.0799 101.6039
Jul-14
222.4 -9.48311 6.831203 -16.3143 266.1568
Aug-14
208.15 -6.40737 6.831203 -13.2386 175.2599
Sep-14
232.25 11.57819 6.831203 4.746985 22.53387
Oct-14
322.05 38.66523 6.831203 31.83403 1013.405
Nov-14
384.2 19.29825 6.831203 12.46704 155.4271
Dec-14
514.75 33.9797 6.831203 27.14849 737.0408
Jan-15
442.35 -14.0651 6.831203 -20.8963 436.6547
Feb-15
488.1 10.34249 6.831203 3.511286 12.32913
Mar-15
81.97444 3084.163

Return = × 100

No.of months
𝑫𝟐
𝛴𝐷 2 = 3084.163; N= 12
47
3084.163
Variance =
12−1
= 280.3784
𝜎 = √280.3784
= 16.74
Close Price
600
500
400
300
Close Price
200
100
Graph No 4.6
Closing price of Jet airways for 2014-2015
Interpretation
was obtained in November 2014 and lowest return of -14.06 % was obtained in February 2015.
The average return rate of return of jet airways for 12 months period was 6.83. The standard
48
Table No: 4.7
Calculation of Risk Return analysis on jet airways for the year ended
2015-2016
Month Close Price Returns Average Deviation d2
Apr-15 379.4 - 5.403229 -5.40323 29.19488
May-15 385.4 1.581444 5.403229 -3.82178 14.60604
Jun-15 281.65 -26.9201 5.403229 -32.3233 1044.796
Jul-15 400.3 42.12675 5.403229 36.72352 1348.617
Aug-15 337.8 -15.6133 5.403229 -21.0165 441.6941
Sep-15 324.1 -4.05565 5.403229 -9.45888 89.47047
Oct-15 436.7 34.74236 5.403229 29.33913 860.7848
Nov-15 514.1 17.72384 5.403229 12.32061 151.7974
Dec-15 702.45 36.63684 5.403229 31.23361 975.5385
Jan-16 602.6 -14.2145 5.403229 -19.6178 384.8567
Feb-16 491.9 -18.3704 5.403229 -23.7736 565.1852
Mar-16 547 11.20146 5.403229 5.798235 33.61953
64.83875 5940.161

Return = × 100

No.of months
𝑫𝟐
𝛴𝐷 2 = 5940.161; N= 12
49
5940.161
Variance =
12−1
= 540.0146
𝜎 = √540.0146
= 23.23
Close price
800
700
600
500
400
300 Close price
200
100
0
Graph No 4.7
Interpretation
was obtained in July 2015 and lowest return of -26.92 % was obtained in June 2015. The
average return rate of return of Jet airways for 12 months period was 5.40. The standard
50
Table No: 4.8
2016-2017
Apr-16 619.95 - -0.71948 0.719478 0.517648
May-16 588.05 -5.14558 -0.71948 -4.4261 19.59035
Jun-16 555.75 -5.49273 -0.71948 -4.77325 22.78394
Jul-16 619.25 11.426 -0.71948 12.14548 147.5126
Aug-16 539.55 -12.8704 -0.71948 -12.1509 147.6451
Sep-16 476.2 -11.7413 -0.71948 -11.0218 121.4798
Oct-16 467.45 -1.83746 -0.71948 -1.11799 1.249892
Nov-16 397.35 -14.9963 -0.71948 -14.2768 203.8264
Dec-16 347.35 -12.5834 -0.71948 -11.8639 140.7518
Jan-17 402.6 15.90615 -0.71948 16.62562 276.4114
Feb-17 446.3 10.85445 -0.71948 11.57392 133.9557
Mar-17 525.95 17.84674 -0.71948 18.56622 344.7044
-8.63373 1560.429

Return = × 100

No.of months
𝑫𝟐
𝛴𝐷 2 = 1560.429; N= 12
1560.429
Variance =
12−1
= 141.8571
51
𝜎 = √141.8571
= 11.91
Close price
700
600
500
400
300
Close price
200
100
0
Graph No 4.8
Interpretation
% was obtained in March 2017 and lowest return of -14.99 % was obtained in November 2016.
The average return rate of return of Jet airways for 12 months period was -0.719. The standard
52
Table No: 4.9
2017-2018
Month Close Price Returns Average deviation d2

Apr-17 517.85 - 2.292055 -2.29205 5.253515
May-17 477.95 -7.70493 2.292055 -9.99699 99.93978
Jun-17 563.95 17.99351 2.292055 15.70146 246.5358
Jul-17 596.15 5.709726 2.292055 3.417671 11.68048
Aug-17 577.25 -3.17034 2.292055 -5.4624 29.83779
Sep-17 482 -16.5006 2.292055 -18.7927 353.1657
Oct-17 582.6 20.87137 2.292055 18.57931 345.1909
Nov-17 679.25 16.58943 2.292055 14.29737 204.4148
Dec-17 831.3 22.38498 2.292055 20.09293 403.7258
Jan-18 753.65 -9.34079 2.292055 -11.6328 135.3231
Feb-18 745.35 -1.10131 2.292055 -3.39336 11.5149
Mar-18 609.5 -18.2263 2.292055 -20.5184 421.0044
27.50466 2267.587

Return = × 100

No.of months
𝑫𝟐
𝜮𝑫𝟐 = 2267.587; N= 12
2267.587
Variance =
12−1
= 206.1442
53
𝜎 = √206.1442
= 14.35
Close price
900
800
700
600
500
400
Close price
300
200
100
0
Graph No 4.9
Interpretation
% was obtained in December 2017 and lowest return of -18.22 % was obtained in March 2018.
The average return rate of return of Jet airways for 12 months period was 2.29. The standard
54
Table No: 4.10
2018-2019

Apr-18 641.95 - -4.62797 4.627973 21.41814
May-18 413.25 -35.6258 -4.62797 -30.9979 960.867
Jun-18 346.7 -16.1041 -4.62797 -11.4761 131.7004
Jul-18 308.7 -10.9605 -4.62797 -6.33251 40.1007
Aug-18 282.2 -8.58439 -4.62797 -3.95641 15.6532
Sep-18 180.45 -36.056 -4.62797 -31.428 987.7202
Oct-18 222.3 23.19202 -4.62797 27.81999 773.952
Nov-18 305.8 37.56185 -4.62797 42.18983 1779.981
Dec-18 277.65 -9.20536 -4.62797 -4.57739 20.9525
Jan-19 237.4 -14.4967 -4.62797 -9.8687 97.39115
Feb-19 222.8 -6.14996 -4.62797 -1.52198 2.316437
Mar-19 269.35 20.89318 -4.62797 25.52115 651.3291
-55.5357 5483.382

Return = × 100

No.of months
𝑫𝟐
𝜮𝑫𝟐 = 5483.382; N= 12
5483.382
Variance = 12−1
= 498.4892
𝜎 = √498.4892
= 22.32
55
Close price
700
600
500
400
300
Close price
200
100
0
Graph No 4.10
Interpretation
% was obtained in November 2018 and lowest return of - 35.62 % was obtained in May 2018.
The average return rate of return of Jet airways for 12 months period was -4.62. The standard
56
Table No: 4.11
Calculation of Risk Return Analysis on Spice jet for the year ended
2014-2015
Apr-14 15.08 - 4.3531874 -4.35319 18.95024
May-14 18.2 20.68966 4.3531874 16.33647 266.8802
Jun-14 19.1 4.945055 4.3531874 0.591868 0.350307
Jul-14 13.8 -27.7487 4.3531874 -32.1019 1030.531
Aug-14 12.8 -7.24638 4.3531874 -11.5996 134.5499
Sep-14 12.32 -3.75 4.3531874 -8.10319 65.66165
Oct-14 13.93 13.06818 4.3531874 8.714994 75.95113
Nov-14 18.24 30.94042 4.3531874 26.58723 706.8807
Dec-14 17.2 -5.70175 4.3531874 -10.0549 101.1019
Jan-15 22.2 29.06977 4.3531874 24.71658 610.9093
Feb-15 23.05 3.828829 4.3531874 -0.52436 0.274952
Mar-15 21.7 -5.85683 4.3531874 -10.21 104.2445
52.2382 3116.29

Return = × 100

No.of months
𝑫𝟐
𝜮𝑫𝟐 = 3116.29; N= 12
3116.29
Variance = 12−1
= 283.29
57
𝜎 = √283.29
= 16.83
Close Price
25
20
15
10 Close Price
Graph No 4.11
Closing price of Spice jet for 2014-2015
Interpretation
During the period of 12 months that is April 2014 – March 2015. The highest return of
30.94% was obtained in November 2014 and lowest return of -27.74% was obtained in July
2014. The average return rate of return of spice jet for 12 months period was 4.35. The
standard deviation as being calculated was 16.83.
58
Table No: 4.12
Calculation of Risk Return analysis on Spice jet for the year ended
2015-2016

Apr-15 18.4 - 13.996931 -13.9969 195.9141
May-15 20.15 9.51087 13.996931 -4.48606 20.12475
Jun-15 18.35 -8.933 13.996931 -22.9299 525.7819
Jul-15 27.25 48.50136 13.996931 34.50443 1190.556
Aug-15 24.8 -8.99083 13.996931 -22.9878 528.437
Sep-15 27.1 9.274194 13.996931 -4.72274 22.30425
Oct-15 46.75 72.50923 13.996931 58.51229 3423.689
Nov-15 67.7 44.81283 13.996931 30.8159 949.6199
Dec-15 75.25 11.15214 13.996931 -2.84479 8.092827
Jan-16 87.3 16.01329 13.996931 2.016358 4.065699
Feb-16 62.1 -28.866 13.996931 -42.8629 1837.229
Mar-16 63.95 2.979066 13.996931 -11.0179 121.3934
167.963 8827.21

Return = × 100

No.of months
𝑫𝟐
𝜮𝑫𝟐 = 8827.21; N= 12
8827.21
Variance = 12−1
= 802.47
59
𝜎 = √802.47
= 28.32
Close price
100
90
80
70
60
50
40 close price
30
20
10
0
Graph No 4.12
Interpretation
was obtained in July 2015 and lowest return of -28.86 % was obtained in February 2016. The
average return rate of return of spice jet for 12 months period was 13.99. The standard deviation
as being calculated was 28.32.
60
Table No: 4.13
Calculation of Risk Return analysis on spice jet for the year ended
2016-2017

Apr-16 74 - 3.7309638 -3.73096 13.92009
May-16 68.25 -7.77027 3.7309638 -11.5012 132.2784
Jun-16 64.9 -4.90842 3.7309638 -8.63939 74.63904
Jul-16 68 4.776579 3.7309638 1.045616 1.093312
Aug-16 58.95 -13.3088 3.7309638 -17.0398 290.3544
Sep-16 58.5 -0.76336 3.7309638 -4.49432 20.19894
Oct-16 73.7 25.98291 3.7309638 22.25194 495.1489
Nov-16 64.35 -12.6866 3.7309638 -16.4175 269.5353
Dec-16 57.2 -11.1111 3.7309638 -14.8421 220.2872
Jan-17 64.85 13.37413 3.7309638 9.643162 92.99057
Feb-17 75.25 16.03701 3.7309638 12.30604 151.4387
Mar-17 101.7 35.1495 3.7309638 31.41854 987.1245
44.7716 2749.009

Return = × 100

No.of months
𝑫𝟐
𝜮𝑫𝟐 = 2749.009; N= 12
2749.009
Variance = 12−1
= 249.90
𝜎 = √249.90
= 15.80
61
Close price
120
100
80
60
close price
40
20
Graph No 4.13
Interpretation
% was obtained in March 2017 and lowest return of -13.30 % was obtained in August 2016.
The average return rate of return of spice jet for 12 months period was 3.73. The standard
62
Table No: 4.14
2017-2018

Apr-17 107.35 - 1.8538941 -1.85389 3.436924
May-17 105.65 -1.58361 1.8538941 -3.4375 11.8164
Jun-17 132.15 25.08282 1.8538941 23.22893 539.583
Jul-17 118 -10.7075 1.8538941 -12.5614 157.7894
Aug-17 130.85 10.88983 1.8538941 9.035936 81.64815
Sep-17 128.05 -2.13985 1.8538941 -3.99375 15.95003
Oct-17 143.85 12.33893 1.8538941 10.48504 109.936
Nov-17 143 -0.59089 1.8538941 -2.44479 5.976986
Dec-17 145.95 2.062937 1.8538941 0.209043 0.043699
Jan-18 124.25 -14.8681 1.8538941 -16.722 279.6253
Feb-18 138.05 11.10664 1.8538941 9.252746 85.6133
Mar-18 125.15 -9.34444 1.8538941 -11.1983 125.4027
22.2467 1416.82

Return = × 100

No.of months
𝑫𝟐
𝜮𝑫𝟐 = 1416.82; N= 12
1416.82
Variance =
12−1
= 128.80
63
𝜎 = √128.80
= 11.34
Close price
160
140
120
100
80
60 Close price
40
20
0
Graph No 4.14
Interpretation
% was obtained in June 2017 and lowest return of -14.86 % was obtained in January 2018. The
average return rate of return of spice jet for 12 months period was 1.85. The standard deviation
as being calculated was 11.34.
64
Table No: 4.15
2018-2019
Apr-18 129.7 - -1.641617 1.641617 2.694906
May-18 119.25 -8.05705 -1.641617 -6.41544 41.15784
Jun-18 109.1 -8.51153 -1.641617 -6.86991 47.19571

Jul-18 98.85 -9.39505 -1.641617 -7.75343 60.11573
Aug-18 79.05 -20.0303 -1.641617 -18.3887 338.1455
Sep-18 68.15 -13.7887 -1.641617 -12.1471 147.5526
Oct-18 72.65 6.603081 -1.641617 8.244698 67.97505
Nov-18 81.5 12.18169 -1.641617 13.82331 191.0839
Dec-18 89.2 9.447853 -1.641617 11.08947 122.9763
Jan-19 80.55 -9.69731 -1.641617 -8.05569 64.89418
Feb-19 79.85 -0.86903 -1.641617 0.772591 0.596897
Mar-19 97.75 22.41703 -1.641617 24.05865 578.8186
-19.699 1663.21

Return = × 100
Total of returns
𝑫𝟐
𝜮𝑫𝟐 = 1663.21; N= 12
1663.31
Variance = 12−1
= 151.21
65
𝜎 = √151.21
= 12.29
Close price
140
120
100
80
60
Close price
40
20
0
Graph No 4.15
Interpretation
was obtained in March 2019 and lowest return of -13.78 % was obtained in September 2018.
The average return rate of return of spice jet for 12 months period was -1.64. The standard
66
Table No: 4.16
Calculation of Risk Return analysis on Indigo Airlines for the year ended
2016- 2017
Month Close Price Returns average deviation d2
Apr-16 1072.15 - 0.177704 -0.1777 0.031579
May-16 1060.75 -1.06328 0.177704 -1.24099 1.540051
Jun-16 1012.2 -4.57695 0.177704 -4.75465 22.60674
Jul-16 989.4 -2.25252 0.177704 -2.43022 5.905984
Aug-16 881.05 -10.9511 0.177704 -11.1288 123.8499
Sep-16 916.05 3.972533 0.177704 3.794829 14.40073
Oct-16 936.1 2.188745 0.177704 2.011041 4.044287
Nov-16 859.05 -8.23096 0.177704 -8.40866 70.7056
Dec-16 821.2 -4.40603 0.177704 -4.58373 21.01061
Jan-17 900.85 9.699221 0.177704 9.521517 90.65928
Feb-17 856.25 -4.95088 0.177704 -5.12858 26.30237
Mar-17 1050.65 22.70365 0.177704 22.52595 507.4182
2.132445 888.4753
Calculations:

Return = × 100
Total of returns
𝑫𝟐
𝜮𝑫𝟐 = 888.4753; N= 12
67
888.4753
Variance = 12−1
= 80.77
𝜎 = √80.77
= 8.98
Close price
1200
1000
800
600
400
close price
200
0
Jul-16
Jan-17
Oct-16
Dec-16
Apr-16
Aug-16
Nov-16
May-16
Jun-16
Mar-17
Sep-16
Feb-17
Graph No 4.16
Closing price of Indigo for 2016-2017
Interpretation
% was obtained in March 2017 and lowest return of -10.95 % was obtained in August 2016.
The average return rate of return of Indigo for 12 months period was 0.177. The standard
68
Table No: 4.17
Calculation of Risk Return analysis on Indigo Airlines for the year ended
2017-2018

Apr-17 1105.5 - 1.556729 -1.55673 2.423404
May-17 1105.9 0.036183 1.556729 -1.52055 2.31206
Jun-17 1164.95 5.339542 1.556729 3.782814 14.30968
Jul-17 1290.75 10.79875 1.556729 9.242018 85.4149
Aug-17 1224.45 -5.13655 1.556729 -6.69328 44.79996
Sep-17 1096.25 -10.47 1.556729 -12.0267 144.6424
Oct-17 1244.3 13.50513 1.556729 11.9484 142.7643
Nov-17 1124.75 -9.60781 1.556729 -11.1645 124.647
Dec-17 1200.55 6.739275 1.556729 5.182547 26.85879
Jan-18 1211.7 0.928741 1.556729 -0.62799 0.394369
Feb-18 1335.45 10.21292 1.556729 8.656195 74.92972
Mar-18 1286.5 -3.66543 1.556729 -5.22216 27.27095
18.68075 690.7675

Return = × 100

No.of months
𝑫𝟐
𝜮𝑫𝟐 = 690.7675; N= 12
690.7675
Variance = 12−1
= 62.79
69
𝜎 = √62.79
= 7.92
Close price
1600
1400
1200
1000
800
600 close price
400
200
0
Jan-18
Jul-17
Oct-17
Dec-17
Aug-17
Nov-17
Apr-17
May-17
Jun-17
Sep-17
Feb-18
Mar-18
Graph No 4.17
Interpretation
% was obtained in October 2017 and lowest return of -10.47 % was obtained in September
2017. The average return rate of return of Indigo for 12 months period was 1.55. The standard
70
Table No: 4.18
Calculation of Risk Return Analysis on Indigo Airlines for the year ended
2018-2019
Apr-18 1399.7 - 0.905719 -0.90572 0.820328
May-18 1217.1 -13.0457 0.905719 -13.9514 194.6408
Jun-18 1087 -10.6893 0.905719 -11.5951 134.4455
Jul-18 929.05 -14.5308 0.905719 -15.4365 238.2867
Aug-18 929.1 0.005382 0.905719 -0.90034 0.810608
Sep-18 825.55 -11.1452 0.905719 -12.0509 145.2245
Oct-18 887.45 7.498032 0.905719 6.592312 43.45858
Nov-18 1037.8 16.9418 0.905719 16.03608 257.1559
Dec-18 1165.75 12.32897 0.905719 11.42325 130.4905
Jan-19 1188.55 1.955822 0.905719 1.050103 1.102716
Feb-19 1123.5 -5.47306 0.905719 -6.37877 40.68877
Mar-19 1427.1 27.0227 0.905719 26.11698 682.0965
10.86863 1869.221

Return = × 100

No.of months
𝑫𝟐
𝜮𝑫𝟐 = 1869.221; N= 12
1869.221
Variance = 12−1
= 169.92
71
𝜎 = √169.92
= 13.03
close price
1600
1400
1200
1000
800
600 close price
400
200
0
Graph No 4.18
Interpretation
% was obtained in March 2019 and lowest return of -14.53 % was obtained in July 2018. The
average return rate of return of Indigo for 12 months period was 0.09. The standard deviation
as being calculated was 13.03
72
Chapter – 5
Findings, Conclusions
And Suggestions
FINDINGS
 The future of aviation industry continue to adapt and find innovative solutions in the
areas of technology, environment and safety.
 In Globalvect the stock prices are increasing for four years and decreased for one year.
In jet airways the stock prices are fluctuating to some extent. The spice jet stock prices
are increased for four years and decreased for one year. The indigo airlines stock prices
are increasing from 1st April 2016 to 31st march2019.
 The Globalvect airways have a performed better compare to other airways in terms of
returns. Based on standard deviation of jet airways is highest among the selected
airlines. Indigo airways has given lowest negative return of 10.95 %. Spice jet has a
positive return of 48.5% with highest standard deviation of 28.32.
 There is more risk, the return will be high but is does not hold in all situations especially
in the case of economic crisis.
73
CONCLUSIONS
 The present project has been undertaken to study the risk return analysis of individual
airlines to observe whether the stock price movement have any return and risk. As this
project by studying four individual airlines shares there is a much scope for the analysis
interpretation and conclusion.
 Aviation sector is one of the challenging sector .aviation involves the massive
investment and airports infrastructure is needed. Aviation industry was one of the
fastest growing airline industry across the world during the last decade. The price
movements are recorded in charts and analyzed. The airline industry are complex
systems that require proper management concepts, tools and practices.
 The airline industry is focusing on safety, efficiency and environmental performance
and matching investments with return joining forces to ensure that government policies
for supporting further growth. All the results complied together indicate that are similar
stock price movement analysis in the airlines. The main conclusion is that airline
industry has high volatility sector in capital market.
74
SUGGESTIONS
 It is better to invest in aviation with good performance in return and should consider
the various factors affecting the performance before investing.
 The study provides the information about the performance of stock price in the market
in terms risk and return.
 The high stock price should be chosen from aviation industry depending up on the
market.
 The present study suggested that the investor can hold the share for some period.
 Where there is more risk the return will be high but this does not hold in all situations
especially in the case of economic crisis.
 The risk taker can invest in aviation industry that especially Indigo airlines.
 Before buying and selling of stock price movement are should be analyzed.
75
Bibliography
Bibliography
https://www.google.com/search?q=aviation+industry+wikipedia&oq=aviationindustry++
wiki&aqs=chrome.1.69i57j0l7.77973j0j9&sourceid=chrome&ie=UTF-8
https://www.ibef.org/industry/indian-aviation.aspx
https://www.ibef.org/industry/indian-airports-analysis-presentation
https://www.google.com/search?q=aviation+stocks&oq=aviation+stock&aqs=chrome.3.6
9i57j35i39l2j0l5.9986j0j7&sourceid=chrome&ie=UTF-8
https://www.google.com/search?q=jetairways&oq=&aqs=chrome.0.69i59l6.14956j0j7&so
urceid=chrome&ie=UTF-8
https://www.google.com/search?gs_ssp=eJzj4tTP1TcwLcgyLFdgNGB0YPDiLC7ITE5Vy
EotAQBZ2Aci&q=spice+jet&oq=spice+jet&aqs=chrome.1.69i57j46j0l5j5.14763j0j9&so
urceid=chrome&ie=UTF-8
https://www.google.com/search?q=indigo+airlines&oq=&aqs=chrome.0.69i59l8.30494j0j
7&sourceid=chrome&ie=UTF-8
https://www.bseindia.com/markets/Equity/EQReports/IndustryView.aspx?expandable=2&
page=70101002%20&scripname=Airlines
https://www.moneycontrol.com/india/stockpricequote/transportlogistics/jetairways/JA01
76

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A Study on Aviation Stock Performance with Reference to

Karvy Stock Broking Limited.

In partial fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Department of Business Management

160618672027 Signature of the Student

This is to certify that the Project Report titled “Aviation Stock

Internal Guide Head of the Department

Chapter Page Numbers

List of Tables i-ii

II Review of literature 13-24

III Industry and Company Profile 25-35

IV Data Analysis and Interpretation 36-72

V Findings, Conclusions and Suggestions 73-75

Tables No. Tables Page Number

4.2 Calculation of Risk Return analysis on Globalvect 39

4.3 Calculation of Risk Return analysis on Globalvect 41

4.4 Calculation of Risk Return analysis on Globalvect 43

4.5 Calculation of Risk Return analysis on Globalvect 45

4.6 Calculation of Risk Return analysis on Jet airways 47

4.7 Calculation of Risk Return analysis on Jet airways 49

4.8 Calculation of Risk Return analysis on Jet airways 51

4.9 Calculation of Risk Return analysis on Jet airways 53

4.10 Calculation of Risk Return analysis on Jet airways 55

4.11 Calculation of Risk Return analysis on spice jet for 57

4.12 Calculation of Risk Return analysis on spice jet for 59

4.13 Calculation of Risk Return analysis on spice jet for 61

4.14 Calculation of Risk Return analysis on spice jet for 63

4.16 Calculation of Risk Return analysis on Indigo for the 67

4.17 Calculation of Risk Return analysis on Indigo for the 69

4.18 Calculation of Risk Return analysis on Indigo for the 71

Tables No Graphs Page Number

4.2 Closing Price of Globalvect for 2015-2016 40

4.3 Closing Price of Globalvect for 2016-2017 42

4.4 Closing Price of Globalvect for 2017-2018 44

4.5 Closing Price of Globalvect for 2018-2019 46

4.6 Closing Price of Jet airways for 2014-2015 48

4.7 Closing Price of Jet airways for 2015-2016 50

4.8 Closing Price of Jet airways for 2016-2017 52

4.9 Closing Price of Jet airways for 2017-2018 54

4.10 Closing Price of Jet airways for 2018-2019 56

4.11 Closing Price of Spice jet for 2014-2015 58

4.12 Closing Price of Spice jet for 2015-2016 60

4.13 Closing Price of Spice jet for 2016-2017 62

4.14 Closing Price of Spice jet for 2017-2018 64

4.15 Closing Price of Spice jet for 2018-2019 66

4.16 Closing Price of Indigo for 2016-2017 68

4.17 Closing Price of Indigo for 2017-2018 70

4.18 Closing Price of Indigo for 2018-2019 72

Bombay Stock Exchange

National Stock Exchange

Types of financial investments

Factors Influencing the Growth Rate Aviation Industry

 Increased inward and outward of tourism.

Military Aviation and its introduction on the aircraft industry

Objectives of the study

Limitations of the study

 The study is confined to only aviation industry.

 As of December 2019, France based Safran Group is planning an investment of US$

KARVY GROUP COMPANIES

(1) Karvy Stock Broking Limited

(2) Karvy Global Services Limited

Karvy is in re-engineering and managing processes or delivering new efficiencies, company’s

(3) Karvy Commodities Broking Limited