Project On

INDUSTRY AND COMPANY

ANALYSIS

JAYANTH AND TAYYEBA KHURSHID

PGCM IBCM (2022-2023)
IMS PROSCHOOL KOCHI
INDIAN AVIATION INDUSTRY
 World’s third-largest domestic aviation market
 Civil aviation sector has become one of the fastest-growing in the
nation.
 It can be broadly divided into three categories:
• Scheduled air transport service
• Non-scheduled air transport service
• Air cargo service
 1 billion trips annually by 2023.
 The indian aviation industry has recovered fully from the covid-19 pandemic
shock as indicated by the air traffic movement.
 MARKET SIZE
GRAPH OF DATA AS OF (2020)

 World's third-largest air passenger market in the

next ten years, by 2030.
 The number of airplanes is expected to reach
1,100 planes by 2027.
 As of 2022, india had 129 operational airports.
 Envisaged increasing the number of
operational airports to 190-200 by fy40.
I N D I A N AV I AT I O N I N D U S T RY, R O A D
AHEAD
 UDAN-RCS scheme aims to increase air connectivity by providing
affordable, economically viable and profitable travel on regional routes.
 India will need 2,380 new commercial airplanes by 2038.
 the travel market in India, worth ~ US$ 75 billion in FY20, is projected to
cross US$ 125 billion by FY27.
 OBJECTIVE
 Study financial statements of the past 4 years of 2 companies
 Compute ratios on the basis of financial statements.
 Analyze both companies’ ratios.
 Profitability
 Efficiency
 Return Performance
 Solvency
 Liquidity 
 Compare the performance of both companies.
 Conclusion on the comparison of the two companies.
THE BATTLE FOR SUPREMACY IN INDIA’S LOW-COST CARRIER MARKET
SpiceJet Ltd is principally engaged in the business of InterGlobe Aviation Limited, doing business as IndiGo, is an Indian
providing air transport services for the carriage of low-cost airline headquartered in Gurgaon, Haryana, India. It is the
passengers and cargo. largest airline in India by passengers carried and fleet size.

Founders Founders
Ajay Singh, Bhupendra S. Kansagra Rahul Bhatia, Rakesh Gangwal

Founded Founded:
9 February 1984 August 2006

Headquarters Headquarters
Gurugram Gurugram

Commenced operations Commenced operations

23 May 2005; 17 years ago 4 August 2006; 16 years ago

Destinations of operation Destinations of operation

75 Domestic 53 Domestic
26 International 12 International

Passengers Carried (2021-22) Passengers Carried (2021-22)

Over 46.6 million+ Over 9 million
 Promoters 77.93%
Promoters 59.39% Company Name Market Cap (Rs. cr) Foreign Institutions 17.77%

Foreign Institutions 0.65%

Interglobe Avi 72,147.43 Nbanks MutualFunds 6.23%
SpiceJet 2,084.19
Others 0.7%
Nbanks MutualFunds 0.01% Jet Airways 778.94 GeneralPublic 1.28%
Others 4.79% Global Vectra 81.48 Financial Institutions 2.09%

Share holding Patern 0.70% 1.28% 2.09%

6.23%
4.79%
0.01%

0.65% Promoters
17.77% Foreign Institutions
Promoters
NBanksMutualFunds
Foreign Institutions
Others
NBanksMutualFunds
77.93% GeneralPublic
Others
FinancialInstitutions
59.39%
 REVENUE GROWTH
400,000.00 100%
350,000.00 77.12% 80%
357,560.01
300,000.00 60%
35.66%
40%
250,000.00 27.69%
25.47% 20%
200,000.00
0%
150,000.00 259,309.27
146,406.31 -20%
100,000.00 123,745.69 -40%
50,000.00 -58.21%
-59.05% 66,035.94 -60%
51,714.48
0.00 -80%
2020 2021 2022

Based on the graph, it appears that the revenue growth for INDIGO was stronger than the revenue growth for SPICEJET.
Both sets experienced a decrease in revenue growth in 2021, but INDIGO had a better recovery in 2022, with a higher
revenue growth figure.
PROFITABILITY RATIOS

 NET PROFIT MARGIN

 EBIT MARGIN
 PRE TAX MARGIN
 EBITDA MARGIN
 GROSS MARGIN
 COST
COMPARISON

100% 100% 4.93

16.64 90%
20.92
90% 80%
11.24 70% 12.26
80%
60%
70% 24.21 50%
40%
60% 78.56
30%
50% 20%
10%
40%
0%
30% 77.84

20%

10%

0%
 GROSS MARGIN EBIT MARGIN
INDIGO SPICE JET INDIGO SPICE JET
4.53%
29.22%
24.60%
29.85% 2020 2021 2022
18.01%
-9.87% -25.11% -14.64%
16.47% 12.67%

2020 2021 2022 -26.59% -33.48%

• The gross margin was high for both in 2020. but
declined in 2021.
• In 2022 Indigo managed to increase whereas
SpiceJet declined further
• This suggests that the company has not been able
to maintain a consistent level of profitability in its
sales.
• The EBIT margin for SpiceJet was negative in all three
years, declining in 2021 and 2022. This suggests that the
company has been facing challenges in generating profits
after accounting for interest and taxes.
• For Indigo, Margin was positive in 2020 but declined
drastically 2021 and 2022.
• This suggests that the company has been facing challenges
in generating profits after accounting for interest and taxes.
 EBITDA MARGIN • The EBITDA margin for SpiceJet was negative in 2020.
INDIGO SPICE JET there was a slight improvement in 2021. But in 2022 it
declined drastically.
• SPICEJET is not able to maintain a consistent level of
15.65% profitability before accounting for interest, taxes,
6.99% depreciation, and amortization.

4.91%
2.00%
2020 2021 2022
• Whereas, for Indigo, the EBITDA margin was high in
-4.00%
2020. It fell in 2021 and kept declining in 2022.
-14.00%
• This suggests that the company has been facing
challenges in generating profits before accounting for
interest, taxes, depreciation, and amortization.
 PROFITABILITY RATIOS
EBT MARGIN NET PROFITN MARGIN
INDIGO SPICE JET INDIGO SPICE JET

3.58%
3.52%
2020 2021 2022
2020 2021 2022
-13.71%
-20.93% -20.90%
-32.66% -13.71%
-32.74%

-35.00% -41.07% -35.00% -41.07%

For both companies margin declined from 2020 to 2022. For both companies margin declined from 2020 to 2022. This
This suggests that the company's profitability before taxes suggests that the company's profitability before taxes has
has decreased over time, which may be due to factors decreased over time, which may be due to factors such as
such as increased costs or lower revenues. increased costs or lower revenues

Indigo is slightly better as it was positive in 2020 and Both are experiencing losses after accounting for all expenses,
shows improvement in 2022. including taxes and interest.

Indigo again performing better.

TURNOVER RATIOS

 Receivables turnover
 Inventory turnover
 Payables turnover
 Asset turnover
 Fixed asset turnover
 EFFICIENCY RATIOS

SJ 2020 SJ 2021 SJ 2022 IG 2020 IG 2021 IG 2022

107.00

60.70

60.34
53.03
44.03

29.90
Inventory turnover

 For SpiceJet ratio has decreased over the three
years provided, indicating they are holding
excess inventory. But did make an effort to
overcome this.
 This will impact the company's working capital
and cash flow, as excess inventory ties up capital
and can lead to increased storage costs.
 For indigo ratio increased 2021, but then
decreased in 2022. Till 2021 INDIGO was
managing its inventory more efficiently.
 The significant decrease in 2022 suggests a
potential issue with excess or obsolete inventory
 EFFICIENCY RATIOS

SJ 2020 SJ 2021 SJ 2022 IG 2020 IG 2021 IG 2022

28.15

13.39
10.27

8.10

6.15
5.33
Receivables turnover

Ratio decreased significantly over the three years
provided, which indicates that the company is taking
longer to collect payments from its customers.
This could be a concern for the company's cash flow
and liquidity.
Ratio decreased in 2021, and then slightly increased in
2022.
This suggests that they are taking longer to collect
payments from customers, which could be a sign of
financial difficulties or poor credit policies.
 EFFICIENCY RATIOS

SJ 2020 SJ 2021 SJ 2022 IG 2020 IG 2021 IG 2022

40.17

74.40
67.44
9.73

8.82
6.65
Payables turnover

For INDIGO ratio increased from 40.17 in 2020 to 67.44 in

Ratios for SpiceJet have been pretty low every year. This 2021, and then further increased to 74.40 in 2022. This
shows they don’t have enough days to make payments to suggests that the company is taking longer to pay its
their suppliers. suppliers, which could be a sign of financial distress or an
attempt to preserve cash.
 EFFICIENCY RATIOS

IG 2020 IG 2021 IG 2022 SJ 2020 SJ 2021 SJ 2022

1.40

1.29
1.07

1.05

0.82
3.16
0.66
0.63

0.58
0.43

0.34

2.39
Asset turnover Fixed asset turnover

Both decreased in 2021, but then increased in 2022.

Both decreased over the three years provided, which
shows their sales have not been sufficient to support its
assets. This could be a concern for the company's overall
profitability.
This could suggest both are not efficiently utilizing thier fixed
assets, which could be due to a lack of demand or poor
management.

Comparatively Indigo seems to be doing better However, the increase in 2022 could indicate that they are
taking steps to address this issue.
Comparatively SpiceJet seems to be in a better position.
 EFFICIENCY RATIOS

• Overall, the analysis of these turnover ratios suggests • Overall, these ratios suggest that IndiGo may be
that SpiceJet may be facing challenges in managing its experiencing financial difficulties, but there are also
assets and inventory effectively, which could be signs that it is taking steps to improve its operations.
impacting its cash flow, liquidity, and profitability. • It is important to analyze these ratios in conjunction
• The company may need to consider measures such as with other financial and non-financial information to
improving its collections of accounts receivable, get a more complete picture of the company's
optimizing its inventory levels, and managing its fixed financial health.
assets effectively to improve its asset turnover and
profitability.
 WORKING CAPITAL DAYS

2020 2021 2022 2020 2021 2022

- Receivables days 27.3 68.5 59.3 13.0 35.6 45.1

- Inventory days 6.9 6.0 12.2 3.4 8.3 6.0

- Payables days 9.1 5.4 4.9 37.5 54.9 41.4

IG 2020 IG 2021 IG 2022 SJ 2020 SJ 2021 SJ 2022

68.5
59.3

54.9
45.1

41.4
37.5
35.6

27.3
13.0
12.2

9.1
8.3

6.9
6.0
6.0

5.4
4.9
3.4

- Inventory days - Receivables days - Payables days

 WORKING CAPITAL DAYS
IG 2020 IG 2021 IG 2022 SJ 2020 SJ 2021 SJ 2022

54.9
59.3

41.4
68.5

37.5
35.6

27.3
13.0
12.2

45.1

9.1
8.3

6.9

6.0
6.0

5.4

4.9
3.4

- Inv entor y day s - Receiv ables day s - P ay ables day s

• Inventory days
INDIGO has kept the days comparatively stable. But SpiceJet has doubled its days in 2022. Showing that they are holding
excess inventory.
• Receivables days
Indigo’s and SpiceJet’s days have increased significantly. But Spice Jet has taken some efforts to reduce the days in 2022.
Overall Indigo is receiving their payments faster.
• Payables days
For Indigo days have fluctuated over the three years provided, but have remained relatively high, indicating that the
company is taking a long time to pay its suppliers. For Spice jet days decreased over the three years provided, indicating that
the company is paying its suppliers more quickly. This could be a positive sign for SpiceJet relationships with its suppliers, but
could also impact the company's cash flow
 WORKING CAPITAL
DAYS
Materials Purchased Payment Made Goods Sold Payment Received

DAYS OF INVENTORY 8.36 5.9

+
DAYS RECEIVABLES 51.7 31.23
-
DAYS PAYABLES 6.47 44.6
=
CASH CONVERSION CYCLE 53.63 -7.47

2020 2021 2022 2020 2021 2022

25.1 69.2 66.6 -21.1 -11.1 9.7

-VE CCC = Inventory is sold before you have to pay for it. Or, in other words, vendors are financing
business operations. A negative cash conversion cycle is a desirable situation for many businesses.
 WORKING CAPITAL
DAYS
Materials Purchased Payment Made Goods Sold Payment Received

2020 2021 2022 2020 2021 2022

DAYS OF INVENTORY 8.6 5.9
+
DAYS RECEIVABLES 51.7 31.23 25.1 69.2 66.6 -21.1 -11.1 9.7
-
DAYS PAYABLES
6.47 44.6
= 53.63 -7.47
CASH CONVERSION CYCLE

• CCC for Spice Jet increased drastically in 2021 and remained stable in 2022. which is not a good sign as
they are taking a long time in generating cash flows.
• For Indigo, CCC was negative in 2020-2021 but became positive in 2022. This is cause of really high
payable days.
• Overall, the analysis of these working capital ratios suggests that both are facing challenges in
managing its working capital effectively, which could be impacting its cash flow and liquidity.
• They may need to consider measures such as improving its collections of accounts receivable,
optimizing its inventory levels, and managing its payables effectively to improve its working capital
position.
• Comparatively INDIGO CCC preferred as they have enough days to pay and receive cash faster.
 RETURN ON
INVESTMENT

 Operating ROA
 Return on asset - RoA
 Return on capital employed - RoCE
 Return on equity - RoE
 Return on common equity
 RETURN ON INVESTMENT
RATIOS
OPERATING ROA Return on Asset
INDIGO SPICE JET
Return on capital employed
INDIGO SPICE JET

7.59% -14.16%
4.83% 3.75%
2020 2021 2022
2020 2021 2022
2020 2021 2022 -14.25%
-11.26% -44.73% -39.45%
-8.53% -12.18%
-8.63%
-13.83% -11.36% -14.95%
-19.21% INDIGO SPICE JET -199.42%
-21.15% -25.95%

Operating ROA for SpiceJet has worsened, with SpiceJet's RoA has also worsened, with larger negative returns in all
negative returns in all three years, and a larger three years. And RoCE has decreased significantly, with negative
decrease in 2022. returns in all three years and a larger decrease in 2022.

IndiGo's operating ROA has remained IndiGos’s RoA and RoCE has been negative in 2021 and 2022,
consistently low over the three years provided. indicating that the company has not been generating a positive
return on the assets and capital employed
 RETURN ON INVESTMENT
RATIOS

Return On Equity Return On Common Equity

INDIGO SPICE JET INDIGO SPICE JET

327.05%
280%
184.44% 2020 2021 2022
-314%
90% -451% -452%
78%
19.62%
2020 2021 2022

-160.06% -1245.35% -1407.47%

 SpiceJet’s ROE has decreased in 2021 and 2022, with
positive returns only in 2020.
 Indigo’s ROE was positive in 2020 and 2022, but negative
in 2021. This indicates that while the company has been
able to generate profits in some years, the returns have
not been consistent.
 SpiceJet's return on common equity has also worsened, with
larger negative returns in all three years.
 IndiGo's return on common equity has been significantly
negative in the past two years, which means that the company
has been experiencing losses on its equity investments.
 SOLVENCY RATIOS

 Debt to asset ratio

 Debt to capital ratio
 Debt to equity ratio
 Financial leverage ratio
 Interest coverage ratios
SOLVENCY RATIOS

2020 2021 2022 2020 2021 2022

Debt to asset ratio 0.07 0.09 0.11 0.01 0.06 0.08

Debt to capital ratio -22.53 -0.87 -0.45 0.17 0.32 12.19

Debt to equity ratio (x) -0.96 -0.46 -0.31 0.20 0.48 -1.09

Financial leverage ratio -9.15 -5.79 -3.01 5.23 14.22 -15.15

Interest coverage ratios 2.24 2.85 4.58 0.86 -1.72 -1.61

Fixed charge coverage

0.58 0.66 0.29 0.97 0.37 0.40
ratios
 DEBT RATIOS
DEBT TO ASSET DEBT TO CAPITAL DEBT TO EQUITY
INDIGO SPICE JET INDIGO SPICE JET
12.19 INDIGO SPICE JET
0.11 0.48
0.09
0.32 0.20
0.07 0.08 0.17 -0.45
2020 2021 2022 2020 2021 -0.31
2022
0.06 -0.87
-0.46
0.01
-0.96
2020 2021 2022 -22.53 -1.09

 Debt to Asset Ratio has remained relatively stable over the three-year period, with a value
of 0.1 each year. This suggests that the company has maintained a consistent level of debt
financing relative to its total assets. The company has a relatively low level of debt, with the debt-
 Debt to Capital Ratio increased from -22.5 in 2020 to -0.9 in 2021 and further decreased to to-asset and debt-to-equity ratios both remaining stable
-0.4 in 2022. This indicates that the company has significantly reduced its reliance on debt around 0.1-0.2. However, the debt-to-capital ratio increased
to finance its capital. significantly in 2022, which may indicate a recent increase in
 Debt-to-equity ratio is improving over time, moving from -1.0 in 2020 to -0.5 in 2021 and debt financing.
then to -0.3 in 2022. This suggests that the company is gradually reducing its debt level or
increasing its equity. However, since the ratio is still negative, it indicates that the company
has a long way to go to become financially healthy.
 COVERAGE RATIOS
Financial leverage ratio Interest coverage ratios Fixed charge coverage
INDIGO SPICE JET
4.59 Ratio SPICE JET
INDIGO
4.09 0.97
14.22 3.01
5.23
0.63
2020 2021 -3.01
2022 0.86
-5.79 0.37 0.40
-9.15 2020 2021 2022 0.29
-15.15 -1.72 -1.61
INDIGO SPICE JET -0.04
2020 2021 2022

• The interest coverage ratio decreased from 4.1 in 2020 to 3.0 in 2021 and then
increased to 4.6 in 2022. This suggests that the company may have struggled
to generate enough earnings to cover its interest expenses in 2021, but was
Both the interest coverage and fixed charge coverage
able to improve its earnings in 2022. An interest coverage ratio of less than 1.0 ratios show declining trends over the three-year period,
indicates that the company is not generating enough earnings to cover its indicating that the company may have experienced some
interest expenses, while a ratio above 1.0 indicates that it is. difficulties in meeting its interest and fixed charge
• The fixed charge coverage ratio increased from 0.0 in 2020 to 0.6 in 2021, but
then decreased to 0.3 in 2022. A fixed charge coverage ratio of less than 1.0 obligations. However, the ratios remain above 1,
indicates that the company is not generating enough earnings to cover its fixed indicating that the company has sufficient earnings to
charges. This suggests that the company was not able to generate enough cover its interest and fixed charge expenses.
earnings to cover its fixed charges in 2022, despite the improvement in its
interest coverage ratio.
 SOLVENCY RATIOS
Overall, these results suggest that while the company
was able to improve its ability to pay interest
expenses in 2022, it still struggled to generate enough
earnings to cover its fixed charges. This may indicate
that the company needs to take steps to improve its
profitability and financial health to meet its financial
obligations more effectively.
Overall, while the company has relatively low
levels of debt, its financial leverage and coverage
ratios have been volatile and may warrant further
investigation to understand the underlying causes
and potential risks.
LIQUIDITY RATIOS

 Current Ratio
 Quick Ratio
 Cash Ratio
 LIQUIDITY RATIOS

CURRENT RATIO CASH RATIO

INDIGO SPICE JET
INDIGO SPICE JET

1.6 0.70
QUICK RATIO 0.66
1.4 1.4 0.60 0.59
INDIGO SPICE JET
1.2
0.50
1.0 1.6 0.45
1.1 0.9 0.40
0.8 1.4
1.3 0.30
0.6 1.2 1.1
0.20
0.4 0.3 0.3
1.0
0.3 0.9 0.10
0.2 0.8
0.00 0.01 0.00 0.01
0.0 0.6 2020 2021 2022
2020 2021 2022
0.3
0.4 0.3

0.2 0.2

0.0
2020 2021 2022
 LIQUIDITY RATIOS
• The company's current ratio and quick ratio have
remained low and stable over the three years provided,
which may indicate that the company is facing
significant challenges in meeting its short-term
obligations with its current assets.
• The company's cash ratio has been zero in all three
years, indicating that the company has not had any cash
available to meet its short-term obligations.
• The company's cash conversion cycle has been positive
in all three years, which indicates that the company is
taking longer to convert its inventory and accounts
receivable into cash, leading to potential liquidity
challenges.
• The company's current ratio has decreased over the three years
provided, which may indicate that the company is facing
challenges in meeting its short-term obligations with its current
assets.
• The company's quick ratio has remained relatively stable over
the three years provided, which indicates that the company has
been able to maintain a sufficient level of short-term liquidity.
• The company's cash ratio has decreased over the three years
provided, which may indicate that the company has been relying
more on non-cash assets to meet its short-term obligations.
• The company's cash conversion cycle has worsened, with
negative days in 2020 and 2021, indicating that the company was
able to convert its inventory and accounts receivables into cash
quickly, but became positive in 2022, indicating that the
company may be experiencing difficulties in converting these
assets into cash in a timely manner.
 LIQUIDITY RATIOS

2020 2021 2022 2020 2021 2022

Current ratio (x) 0.3 0.3 0.3 1.4 1.1 0.9

Quick ratio (x) 0.3 0.3 0.2 1.3 1.1 0.9

Cash ratio (x) 0.0 0.0 0.0 0.7 0.6 0.5

CCC 25.1 69.2 66.6 -21.1 -11.1 9.7

Overall, the analysis of these liquidity and working capital ratios suggests that the company is
facing significant challenges in meeting its short-term obligations and maintaining sufficient
liquidity
 Profitability ratios 0 5
Return on investment ratios 2 3
liquidity ratios 0 4
Activity turnover ratios 0 4
Turnover ratios 1 4
Solvency ratios 4 2
7 22
THANK
YOU
JAYANTH AND TAYYEBA KHURSHID
PGCM IBCM (2022-2023)
IMS PROSCHOOL KOCHI