Capital Calls: Valuing GoAir’s IPO will be a turbulent exercise Leave a comment

An IndiGo Airlines Airbus A320 aircraft takes off in Colomiers near Toulouse, France, October 19, 2017. REUTERS/Regis Duvignau/File Photo

Concise insights on global finance.


UP IN THE AIR. Plans for an initial public offering by GoAir offer a cockpit view of Indian aviation misery. The ultra-low-cost carrier is looking to raise read more $491 million through a Mumbai listing, and a further potential $204 million through a pre-IPO placement of shares. It’s earmarked at least half of the proceeds to trim debt, replace letters of credit and repay unpaid bills to its fuel provider, the $13 billion state-backed Indian Oil (IOC.NS). There’s no other good reason to take an airline public at this time.

GoAir carried 16.2 million passengers in the full fiscal year before the pandemic, but only 15% of that figure in the subsequent nine months. If it prices at the same trailing 18 times EBITDA multiple of Interglobe Aviation (INGL.NS), the owner of top rival Indigo, GoAir’s enterprise might be worth $841 million based on its pre-pandemic performance in the year to March 2020 – even though its profit margins collapsed that year. Applying the same multiple to the prior year’s performance yields a valuation over $2 billion. Valuing an airline during India’s fresh lockdowns will be a turbulent exercise. (By Una Galani).

On Twitter

Earlier in Capital Calls:

Crown regains its swagger in Blackstone rebuff read more

Trains deal goes into high gear read more

Fisker and Foxconn make a promising match read more

Disney misses the mark read more

Airbnb cleans up read more

Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at and follow us on Twitter @Breakingviews and at All opinions expressed are those of the authors.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *