All airline stocks have done well this year, but those of SpiceJet Ltd have flown the highest. They have more than doubled in value, compared to 55% and 62% gain in the shares of Interglobe Aviation Ltd and Jet Airways (India) Ltd.

While SpiceJet’s June quarter earnings wouldn’t necessarily get investors excited, they would reaffirm their faith. Net profit increased about 18% from a year earlier to Rs175 crore. A poll of three Bloomberg analysts had pegged SpiceJet’s June quarter profit at Rs178.60 crore.

SpiceJet’s revenue rose at a healthy pace of 23%, while margins fell a bit, leading to a 19% increase in Ebitda to Rs228 crore. Ebitda is earnings before interest, tax, depreciation and amortization.

There is a slight disappointment on the costs front, analysts say; a chief one being that SpiceJet’s aircraft maintenance costs surged 52% from last year’s June quarter. But according to Kiran Koteshwar, chief financial officer, SpiceJet, maintenance costs seem inflated because of a higher proportion of wet leases last year, thanks to which some portion of maintenance costs were included in aircraft rentals. To be sure, clubbed together, maintenance and rentals costs rose only 16% year-on-year.

Even so, there was a disproportionate increase in maintenance events for this quarter, says Koteshwar, adding that this should ease off a bit in the coming quarters.

Fuel costs increased by more than a third, which was pretty much expected. On an overall basis, operating costs increased at a much faster pace than revenues, resulting in lower margins.

On the other hand, SpiceJet’s average fares increased 9%, which augurs well compared to 1% decline seen in the March quarter. A superior mix of routes allows the company to maximize fares.

It’s important to note that IndiGo’s operating profit rose as much as 35% in the June quarter, faster than SpiceJet’s 19% increase in profit. Why then have the latter’s shares risen at twice the rate of IndiGo’s?

This is largely because its valuations were lower to begin with. In fact, even now, SpiceJet trades at 12.4 times estimated earnings per share for this financial year. In comparison, IndiGo shares trade at 24 times, based on data from Bloomberg. Secondly, the company has delivered on the profitability and yields front.

In general, outlook for the aviation sector is bright given that domestic passenger growth is decent. Further, the strength in the rupee is expected to lead to tailwinds on the costs front and boost profits. Crude prices too are expected to remain stable from a near-to-medium term perspective. However, the sharp appreciation in the stock suggests that a good share of the optimism may be baked into the price.