When Standard Chartered's vice president, equities, Kenneth Andrade told us in May that if you can't make money in the aviation sector now, you will probably never make money in this industry, he could not have imagined that his conviction would come true, so soon.
This is how it panned out - First came the Jet-Sahara merger announcement on April 12, 2006. In little over a year (May 31, 2007) 26 per cent of Deccan Aviation was snapped up by UB Holdings, owners of Kingfisher Airlines. Subsequently, the merger of Indian with Air India was also approved. The high-ticket consolidation in aviation is expected to rescue the industry from the accumulated losses. Together the big three now control over 80 per cent of India's domestic aviation market. So what is the takeway for mutual fund investors?
Since the news of the Deccan-UB deal hit the street, the price of Deccan Aviation built an upward momentum. Kotak Contra added the stock in January. The company also figured in the portfolio of Reliance Vision and Standard Chartered Premier Equity. DSPML Equity added the stock in April but sold it in May. This year, the stock touched a high of Rs 160 on January 12 and a low of Rs 87.65 on April 2. Since then it has recovered significantly and is hovering around Rs 135.
Though the price of Jet Air is nowhere near its listing price of Rs 1,211 (March 14, 2005), it has generated a lot of fund interest. After the talks of the merger failed last year, Jet's stock took a severe beating. Finally, good news on the failed merger came in April 2007. With the possibility of a rejuvenation of the Jet-Sahara deal as many as 11 mutual funds made a beeline for Jet Airways in March, compare this to only six mutual funds that showed interest in February.
Notably after the deal was executed, Principal Infrastructure and Service Industries, Principal Growth and ING Vysya Nifty Plus sold the stock in April. Three schemes of Sundaram BNP Paribas AMC - Sundaram BNP Paribas Select Midcap, Sundaram BNP Paribas Growth and Sundaram BNP Paribas Rural India continue to hold this stock.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
