NEW DELHI: Shares of Vijay Mallya-promoted Kingfisher Airlines fell 3.4% on Thursday, a day after the auditor said in the company's annual report that the carrier needs to infuse required funds to continue operations.
Kingfisher Airlines Ltd needs to infuse required funds to continue as a 'going concern', its auditor has said. The annual report has been posted on the Bombay Stock Exchange website.
Shares in Kingfisher Airlines dropped as much as 5.7% before closing 3.4% lower at Rs 25.25. For the year the stock has plunged over 60%.
The auditor's comments have come at a time when Indian carriers are struggling despite a booming aviation market. In July 2011, India's airlines handled 5.0 million domestic passengers, according to Directorate General Civil Aviation (DGCA) data released on 12th September, 2011.
According to the reports, during July 2011, Vijay Mallya-promoted Kingfisher was the largest domestic standalone carrier with around 1.1 million passengers with a 19% market share, based on CAPA calculations. Jet Airways/JetLite had a combined passenger level of 1.2 million passengers, or around 26% of the market.
All three major carriers are suffering heavy losses on account of volatile ATF prices, shortage of cash and price wars. For the quarter ended June, Kingfisher widened its net loss by 43 percent to 2.64 billion rupees.
Analysts Call:
"Kingfisher Airline Ltd (KFA) has corrected almost 72% in last 10 months. Now it is trading in the range of 24-26. Some leading indicators are giving oversold signal of this stock," said Ranajit Kumar Saha, Sr. Manager, Technical Research at Microsec Capital Ltd.
"So, some pull back rally to Rs 28.50 is expected in the extreme short term and a breach of Rs 28.50 would open the gate for Rs 32. One should hold the stock with a stop loss of Rs 23," added Saha.
"Long-term support of Rs 22 is crucial for Kingfisher Airlines on a closing basis. If the stock goes below this level, it can further fall to Rs 15-17 levels. For the stock to turn positive, it fist needs to consolidate above Rs 30. As of now, on the charts, the stock is Neutral," said technical analyst Birendra Singh of FRR Shares.
"Although KFA and the entire airline sector for that matter have underperformed, I expect a technical rebound on KFA given that its hugely oversold and negatives are completely factored in," said Kunal Saraogi, CEO, Equityrush.
"The auditors report doesn't look all that bad on the charts and we recommend holding the stock with a stop loss below Rs 24," added Kunal.
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