Go Airlines India (GoAir) - IPO Update

Go Airlines India
IPO
26/07/2021

GoAir, an Indian budget airlines owned by the Nusli Wadia group, is planning to come out with an IPO shortly. The DRHP was filed by GoAir with SEBI in May 2021 and it is expecting the approval by July 2021, post which the company would bring out the public issue in August. While the company is yet to confirm, the media had reported that the GoAir IPO was put on hold for 90 days by SEBI due to investigations in its group company, Bombay Dyeing over lapses in compliance. We shall come back to this subject of delay in IPO approval later.

What is the GoAir IPO all about?

GoAir had filed the DRHP with SEBI in May 2021 to raise a sum of Rs.3,600 crore via the IPO route. The entire issue will be a fresh issue with promoters not offloading any stake in the company except for the dilution due to the fresh issue. Go Air has also christened its brand as Go First.

The GoAir IPO will have a QIB allocation of 50%, retail allocation of 35% and HNI allocation of 15%. Against its overall debt of Rs.7,346 crore, Go Air will use the issue proceeds to repay debt of Rs.1,780 crore and replace letters of credit (LC).

The company will also use the funds to repay operating liabilities to Indian Oil Corporation and to invest in new planes. This money will also be used to fund the current order book position of 98 A320 Neo aircraft, which will be delivered in tranches through 2024.

Key facts to know about GoAir ahead of the IPO

Here are some important facts to know about the Go Air business ahead of the IPO.

  1. GoAir, owned by Wadia group, commenced operations in 2005 with its maiden flight between Mumbai and Ahmedabad. Currently, GoAir flies to 37 destinations including 28 domestic and 9 international routes. Wadia group also owns Bombay Dyeing, Britannia, National Peroxide, BBTC and Wadia Realty.
  2. Go Air has flown 8.38 crore passengers on its flights between 2010 and 2020 and has consistently been an industry leader in on-time performance. In a tough year like 2020, GoAir had 88.9% load factor, putting it on top in flying efficiency.
  3. GoAir has a fleet of 56 aircraft consisting of 46 A-320 aircraft and the remaining 10 aircraft being A-320 NEO aircraft. Its order book consists of 98 A-320 NEO aircraft to be delivered in tranches till 2024.
  4. There are some financial concerns too. In FY21, cash flows from operations had fallen to Rs.232 crore from Rs.1738 crore in the previous year. GoAir has been consistently making losses between 2016 and 2020. To add to the financial headwinds, the total debt of GoAir stands at Rs.7,346 crore while net worth is Rs(-1,961) crore.

Reported delay in DRHP approval

It has been reported that SEBI has put off the approval of the GoAir IPO due to pending investigations in Bombay Dyeing since 2019. Under the extant rules, when a group company is under investigation, SEBI can postpone the IPO by 90 days and again for a period of 45 days. However, neither SEBI, nor the Wadia group has confirmed the receipt of any such communication from SEBI. Investors need to keep their fingers crossed till then.

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