IPO Synopsis
The low cost, economy airlines, GoAir, now re-branded as Go First filed an addendum to its DRHP, on November 10. The DRHP was filed with SEBI on May 14, 2021 and it received a green signal from SEBI on August 31, 2021.The IPO opens for subscription on December 8 and the anchor investing will be done a day prior to this, on December 7. The company is looking to raise Rs.3600 crore from this issue. There will be no OFS, just a fresh issue. The book running lead managers, according to the DRHP filed with SEBI are, ICICI Securities Ltd, Morgan Stanley India Private Ltd and Citigroup Global Markets India Pvt Ltd.
About Go Airlines India Ltd
GoAir, founded in 2004 and owned by the Wadia group, started its operations in 2005 and has since then carried 80 million passengers. The company has flights flying to 28 domestic destinations as well as 9 international ones as of January 31, 2020. Around 300 flights are operated daily. As per a survey in 2017, it is the 5th largest airlines company in the country. The target market for this airlines is young professionals, leisure travelers and MSME business travelers. The main aim of the company is profit maximization through maintaining a low cost base and optimum utilization of its fuel efficient, modern fleet. The Managing director and promoter of GoAir, Jeh Wadia, resigned last week and the former CEO of Spirit Airlines, Ben Baldanza has been appointed as GoAir’s Vice Chairman. They have been thinking about going public for a few years but various tiffs in the upper management has kept delaying the process. The Wadia group has 73.3% stake in the company and Baymanco Investment Ltd owns 21.50% stake.
The objectives of the issue are stated as:
1. Prepayment and repayment of all the debt accumulated by the company
2. Repayment of the dues to Indian Oil Corporation for the fuel that has been supplied to GoAir
3. Paying for the upkeep and maintenance of the aircrafts (Rs.254.93 crore)
As on November 2, 2021, Rs.1,346.7 million is the amount of money owed by the company to vendors The company plans on utilizing Rs.96.3 crore from the proceeds of the issue, to pay back the vendors
Go Airlines India Ltd Financial Status
Revenue from operation stands at Rs.7,051.6 crore for the year ended March 31, 2020.This is a 21.8% increase over the revenue of Rs.5,788.7 crore for the year ended March 31, 2019. The company has been making continuous losses from 2016-2020. According to the DRHP, the total debt of the company as on April 19, 2021 is Rs.2,955.9 crore.
The company has seen a 56.3% increase in its revenue in the September 2021 quarter, standing at Rs.752.86 crore. In the first half of FY22, the company saw a rise in the revenue to Rs.1,202 crore due to better utilization of capacity. So, if GoFirst now maintains its current market share, it will see a rise in its top line revenues.
|
PARTICULARS (In Rs. crore) |
FY20 |
FY19 |
FY18 |
|
Revenue from operations |
7,051.6 |
5,788.7 |
4,477 |
|
PAT |
(1,270.7) |
(386.6) |
(31.21) |
|
PARTICULARS (In Rs. crore) |
FY20 |
FY19 |
FY18 |
|
Total Assets |
1,40,82 |
1,11,34 |
7,553.5 |
|
Share Capital |
157.5 |
150 |
150 |
IPO Key Points
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Strengths of investing in the IPO:
1. It has one of the youngest fleets of aircraft in India and globally with the average age being 3.7 years, as of February 2021
2. The market share of the country rose from 8.8% in FY17-18 to 10.8% in FY19-20
3. Even the passenger volume increased by 22.4% to 16.2 million in FY20 and the passenger revenue has also risen by 24.8%
4. The company is set to receive its order of 99 A320 NEO Aircrafts over the next few years
-
Risks of investing in the IPO:
1. The number of departures in December 2020 decreased to 63% of the total in December 2019, due to which the fixed costs increased along with a rise in the amount of debt due to the pandemic
2. A net loss of Rs.470.69 crores between April 2020 and December 2020
3. The entire fleet they possess comprises of Airbus A320. If there are any problems in the engine of the A320, the whole fleet will face the problem and this will be catastrophic for the company
4. Low profit margins experienced
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