Would you like to know if now is the right time to invest in Air India shares? If so, this infographic will help you understand the current market and whether now is a good opportunity for investment.
The current share price of Air India is Rs. 351.05 (approximately $5.09) and the Air India share price index (AIXI) has been rising steadily since January 2011 after a long period of uncertainty due to heavy debt cycles, recession, and terrorist attacks on aviation facilities within India. The AIXI has enjoyed a growth rate of ~14% since January 2011 as opposed to a ~2% decrease in S&P BSE Sensex over the same time period. The AIXI has 14% upside potential and is well below its 52-week high at Rs. 386.
The annual dividend yield of the Air India stocks is ~2.4% and yields could increase as the company generates profits and taps further global demand for Indian aviation services.
The next step would be to see how Air India fares in terms of its financial obligations such as debt repayments, which are on track to be met until 2020 thanks to the company's strategy of repaying debts more quickly than originally agreed with creditors.
On Tuesday, the board of directors of Tata Sons, the Tata Group's holding company, addressed the acquisition of Air India and fundraising plans for the Rs 18,000 crore deal.
To fund the Air India deal, the business will borrow roughly Rs 15,000 crore from banks. The board also discussed the group's airline integration strategy. Tata SIA Airlines is 51 percent owned by the Tata Group, and AirAsia India is 83 percent owned by the Tata Group.
Those who have studied the aviation sector and the Tata airlines and this agreement believe that although there are benefits, there are also risks. The main problem is the amount of money that would be required. Air India's large debts of over Rs 30,000 crore, as well as the huge annual losses it has been incurring, come with the Rs 18,000 crore. Where are all the monies going to come from? Even if the government writes off a big portion of Air India's debt, whatever remains will increase the strain on resources already being felt by Vistara and AirAsia.
As a result, he, like many others, appears to assume that the Tatas are unlikely to run three airlines, and that consolidation is inevitable.
In 2001, the Air India sale process was defended by Arun Shourie in Parliament. That time due to several reasons the sale was stopped or maybe it was withdrawn as it was a single bid. The sale was only for Air India as at that time Air India and Indian Airlines were two separate companies. And at that time Air India only used to run international flights. The share that the Government held then was nearly about 40% but in 2021 Government has succeeded in buying 100% of its stock share. Now, Air India will be able to travel international flights more conveniently to any location without traveling via other countries. Air India will greatly benefit due to its privatization of the government.
There are no IPOs and shares available in the market for trading. So, no one can invest in its shares now. Also, others can’t buy it even though the Government of India is selling it. In the past many attempted to sell but all in vain. There are many fundamentals and technical matters that you need to keep in mind before investing in a company like Air India. It's not a cup of tea for everyone. Investing money in the airline sector has many risks so, better not to invest in it. Besides, Air India stock is not available for retailers as it is not listed on the exchange of stocks. There is not any perfect timing to invest money in the share market as business fundamentals change abruptly thus there is a high chance of making a loss at any time. So, better not to take advice or suggestions from the internet.