Adani Ports shares edged higher on October 25, two days after the company incorporated a wholly-owned aircraft leasing unit, Udanvat Leasing IFSC Ltd. The company, which will have an authorised and paid-up share capital of Rs 2.5 crore, has been incorporated with the objective of carrying out the business activity of owning and leasing aircraft. Udanvat has been incorporated in Gujarat International Finance Technology City (GIFT) city, Gandhinagar, and is yet to commence its operations. Aircraft leasing firms that commence operations from the International Financial Services Centre (IFSC) in GIFT City are entitled to certain exemptions and benefits.
Leasing an aircraft instead of buying it outright can be an alternative for various reasons, including cash-flow considerations. Essentially, a lease involves transferring the aircraft without transferring ownership. The owner of the aircraft, known as the lessor, maintains legal ownership while granting possession to the lessee. Leases can be an alternative for various reasons, including cash-flow considerations, as they involve transferring the aircraft without transferring ownership. Before Adani Group, Tata Group-owned Air India announced setting up an aircraft leasing unit at IFSC Gift City, and budget carrier IndiGo also plans to establish a shop at IFSC Gift City.
Major airline players have been increasing their market shares as some players aircraft have been put on hold due to financial distress and higher oil prices. Go First, a private airline in India, has been hit hard by various challenges, including faulty engines, financial constraints, mismanagement, and fluctuating demand. The airline's engine woes are also due to its financial constraints, which led to deferring maintenance work during COVID. Unpaid dues piled up, and the airline didn't pay them, leading to a shortage in maintenance capability.
Adani Ports over the period of six months has appreciated by 15%; however, on a year-to-date (YTD) basis, the stock is down by 6%.