- We are positive towards SIA’s planned merger of Vistara into Air India, which will allow SIA to strengthen its presence in the fast-growing Indian market via its 25.1% strategic stake in a stronger Air India (the surviving entity).
- - Read this at SGinvestors.io -
- Maintain HOLD on SIA, with a slightly higher target price of S$5.35, based on 1.06x FY24F P/B.
Merging Vistara into Air India.
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- Post the transaction, SIA will own a 25.1% stake in an enlarged Air India Group. Besides the initial investment, SIA is also committed to make further capital injection of up to S$880m (being SIA’s share of amount based on the 25.1% stake), payable only after the merger completion and subject to Air India’s requirement.
- Financing by internal cash. With a significant cash pile of S$17.5b as of end-1HFY23, SIA plans to finance the initial cash investment (S$360m) and the subsequent additional capital injection (if any) with its internal cash resources.
- SIA and Tata expect the merger deal to be completed by Mar 24 (i.e. end of FY24), subject to a number of regulatory approvals such as anti-trust and merger control approvals in India, Singapore and other relevant jurisdictions, the approval of the Indian Civil Aviation Authority etc.
Recap on Vistara.
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