Shares of airline operators surged in Wednesday's session after the government cleared an expanded emergency credit guarantee scheme aimed at supporting sectors hit by the West Asia conflict. SpiceJet stock hit its 5% upper circuit at Rs 12.70 on the NSE, while InterGlobe Aviation, the parent of IndiGo, climbed nearly 4% to Rs 4,376.70.
The gains followed the Union Cabinet's approval of ECLGS 5.0, which is designed to ease liquidity pressures on MSMEs and airlines.
As per Bloomberg data, IndiGo currently has 20 buy calls, four hold calls, and two sell calls from analysts, with an average target price of Rs 5,284.55, implying an upside potential of 21.2%.
SpiceJet, on the other hand, has one buy and sell call each, and two hold calls, with a target price of Rs 21.77, implying an upside potential of 71.4%.
The scheme comes with an outlay of Rs 18,100 crore and is expected to enable additional credit of about rs 2.55 lakh crore, including a dedicated Rs 5,000 crore window for airlines. The move is aimed at helping carriers manage short-term funding needs amid global disruptions linked to the ongoing crisis in West Asia.
Civil Aviation Minister K. Rammohan Naidu said the initiative would provide financial support to maintain airline operations, preserve connectivity and protect jobs across the aviation ecosystem. The scheme also targets MSMEs, which have faced similar stress due to supply chain disruptions and higher operating costs.
Under the framework, passenger airlines can access loans of up to 100% of their peak credit, capped at Rs 1,500 crore. Other eligible borrowers, including MSMEs, can avail up to 20% of their working capital limits, subject to a Rs 100 crore ceiling.
The loans extended to airlines will have a tenure of up to seven years, including a two-year moratorium, while MSMEs and other borrowers will get a five-year tenure with a one-year repayment pause.
The scheme will apply to loans sanctioned after the issuance of detailed guidelines by the National Credit Guarantee Trustee Company (NCGTC) and will remain in force until March 31, 2027. The government expects the measure to help businesses sustain operations, support employment and stabilise supply chains amid ongoing geopolitical uncertainties.
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