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Stocks to Gain as Aerospace Sees Solid Jet Demand in India
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The pandemic has hitherto caused unprecedented market turmoil globally in the commercial aerospace industry. However, the industry has shown signs of gradual recovery over the past few months and is poised to revert to its pre-pandemic pace, probably by 2023-2024. In such a scenario, India boasts a compelling growth trajectory, which perks up the growth prospects of industry players like Boeing (BA - Free Report) , Airbus (EADSY - Free Report) and Embraer (ERJ - Free Report) .
India’s Growth Outlook
As more and more people opt for travel, India is likely to witness a 6.2% annual increase in domestic as well as international air travel for the next 20 years. This, in turn, may boost demand for more commercial jets in the country. Notably, Airbus now anticipates demand for 2,210 planes from the Indian commercial airlines over the next two decades, indicating growth of 16.3% from an earlier projection.
Factors Supporting India’s Growth
Widespread Rollout of Vaccines: As the battered Indian aviation sector emerges from the shocks of COVID-19 pandemic, the vaccination drives further reduce the health risks, aiding in revamping leisure travelling. Per a Morgan Stanley Research report, the Indian aviation industry is likely to return to 80% of the pre-COVID levels during the October-December months of 2022.
Robust Growth Estimate for Air-Passenger Strength: According to the International Air Transport Association (IATA), India is set to become the world’s third largest air passenger market by 2030. Such a remarkable growth projection exhibits immense demand for new jets in the Indian aviation sector, thus highlighting the spectacular growth trajectory for the jet makers to capitalize on.
Strong Demand for Low-Cost Carrier: The rapid development of Indian air transport and the emergence of the low-cost carrier concept solidified the presence of forerunners, namely Boeing and Airbus in India. Moreover, due to large middle-class demography and the rising cohort of professionals, many airlines in India are opting for more low-fare jets to cater to demand for economical flying. This, in turn, further exemplifies the sizeable opportunities for aerospace majors.
Stocks to Gain
Considering the aforementioned factors, the aerospace stocks that might gain from higher demand are:
Boeing: Boeing has been a strong partner of India’s aerospace sector for almost eight decades. BA customers include Air India, Air India Express, SpiceJet, Vistara and Akasa Air. The next-generation 737, 737 MAX, 747, 757, 777 and 787 Dreamliner are some of the BA aircraft, which offer a superior flying experience to Indian passengers.
Airbus: For more than 50 years, Airbus’ unparalleled services have fueled growth in India’s civil aviation sector. EADSY accounts for a vast majority of the in-service fleet in India with more than 700 aircraft still to be delivered. EADSY’s A320 family is the preferred airliner in the Indian aviation market.
Airbus currently carries a Zacks Rank of 3. Its 2022 estimated earnings have been revised 2.7% upward in the past 60 days.
Embraer: Embraer recently showcased its largest member of the new-generation E-Jets family, the E-Jets E2, at Wings India 2022 to tap the sustainable potential that the Indian aviation sector epitomizes. ERJ’s E195-E2 is a low-cost carrier capable of transporting 146 passengers. So, this could be a perfect inclusion in the Indian jet family.
Embraer is currently Zacks #3 Ranked and its long-term earnings growth rate is pegged at 17%. ERJ’s 2022 estimated sales indicate growth of 15.9% from the prior-year figure.
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Stocks to Gain as Aerospace Sees Solid Jet Demand in India
The pandemic has hitherto caused unprecedented market turmoil globally in the commercial aerospace industry. However, the industry has shown signs of gradual recovery over the past few months and is poised to revert to its pre-pandemic pace, probably by 2023-2024. In such a scenario, India boasts a compelling growth trajectory, which perks up the growth prospects of industry players like Boeing (BA - Free Report) , Airbus (EADSY - Free Report) and Embraer (ERJ - Free Report) .
India’s Growth Outlook
As more and more people opt for travel, India is likely to witness a 6.2% annual increase in domestic as well as international air travel for the next 20 years. This, in turn, may boost demand for more commercial jets in the country. Notably, Airbus now anticipates demand for 2,210 planes from the Indian commercial airlines over the next two decades, indicating growth of 16.3% from an earlier projection.
Factors Supporting India’s Growth
Widespread Rollout of Vaccines: As the battered Indian aviation sector emerges from the shocks of COVID-19 pandemic, the vaccination drives further reduce the health risks, aiding in revamping leisure travelling. Per a Morgan Stanley Research report, the Indian aviation industry is likely to return to 80% of the pre-COVID levels during the October-December months of 2022.
Robust Growth Estimate for Air-Passenger Strength: According to the International Air Transport Association (IATA), India is set to become the world’s third largest air passenger market by 2030. Such a remarkable growth projection exhibits immense demand for new jets in the Indian aviation sector, thus highlighting the spectacular growth trajectory for the jet makers to capitalize on.
Strong Demand for Low-Cost Carrier: The rapid development of Indian air transport and the emergence of the low-cost carrier concept solidified the presence of forerunners, namely Boeing and Airbus in India. Moreover, due to large middle-class demography and the rising cohort of professionals, many airlines in India are opting for more low-fare jets to cater to demand for economical flying. This, in turn, further exemplifies the sizeable opportunities for aerospace majors.
Stocks to Gain
Considering the aforementioned factors, the aerospace stocks that might gain from higher demand are:
Boeing: Boeing has been a strong partner of India’s aerospace sector for almost eight decades. BA customers include Air India, Air India Express, SpiceJet, Vistara and Akasa Air. The next-generation 737, 737 MAX, 747, 757, 777 and 787 Dreamliner are some of the BA aircraft, which offer a superior flying experience to Indian passengers.
Boeing currently carries a Zacks Rank #3 (Hold) and boast a long-term earnings growth rate of 4%. Its 2022 estimated sales indicate growth of 34.3% from the prior-year figure. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Airbus: For more than 50 years, Airbus’ unparalleled services have fueled growth in India’s civil aviation sector. EADSY accounts for a vast majority of the in-service fleet in India with more than 700 aircraft still to be delivered. EADSY’s A320 family is the preferred airliner in the Indian aviation market.
Airbus currently carries a Zacks Rank of 3. Its 2022 estimated earnings have been revised 2.7% upward in the past 60 days.
Embraer: Embraer recently showcased its largest member of the new-generation E-Jets family, the E-Jets E2, at Wings India 2022 to tap the sustainable potential that the Indian aviation sector epitomizes. ERJ’s E195-E2 is a low-cost carrier capable of transporting 146 passengers. So, this could be a perfect inclusion in the Indian jet family.
Embraer is currently Zacks #3 Ranked and its long-term earnings growth rate is pegged at 17%. ERJ’s 2022 estimated sales indicate growth of 15.9% from the prior-year figure.