Maximise (#RKIdeas)

A new NFO opportunity like the defence one was a few months ago. SEBI has launched an India opportunities fund. Applications from 6th - 20th FEb. So by the 25th/30th The fund will have to start deploying those funds and a lot do renewable names will get a fresh pump upwards..
Beyond them I really like Power Mech too.

Remember to position yourself accordingly closer to time…

Balu Forge..
Good result..
100% YoY growth..
the best is now to come w new clients onboarded…Q4 the new facility comes online which is precision engineering.

#Maximisepf is now 5x..400%++ since inception 2 years and 9 months ago. Congrats to the Maximise family that follow along on this journey with us.

New Investment Theme: Businesses with Confirmed Order Books

Recall our prior exploration of the wind sector, which proved rewarding for companies like Inox Group, KPI Group, and Sanghvi. Following that success, I've identified a new theme: companies with confirmed order books.

In today's uncertain global environment, with numerous elections, wars and economic anxieties, secure order books offer a distinct advantage. Some of these companies are in sunrise sectors, already have the contracts and backlog which could help them weather market volatility and sector tailwinds will provide new orders for even higher growth.

Promising Industries with Secured Backlogs:
Solar EPC Players: Most major players have locked in large orders for the next 12-24 months, exceeding this year's performance. SW Solar, KPI Green, and Waaree Renewable exhibit substantial growth potential, with Waaree's recent result already proving this thesis. Additionally, SW Solar's pursuit of a negative working capital cycle signifies sector-wide potential for optimization. KPI’s CPP/IPP hybrid model fuels robust performance expectations. Websol, with its recently commissioned facility and pre-booked product sales.
Additives in Petrol/Diesel: Driven by government targets and aggressive policy, this sector presents exciting opportunities. BCL Ind's recent large ethanol order (500cr plus) and the second ethanol procurement tender point towards sustained demand. Maize-based players like Gulshan Polyol and Coastal Corp., as well as diversified sugar player DCM Shriram Ind (with its planned value-unlocking demerger and exposure to multiple hot sectors, including ethanol and defense), are particularly attractive. Kotyark Industries, with its substantial order book exceeding Rs. 1500 crore and potential to reach over Rs. 2000 crore due to large OMC biodiesel orders, could experience a significant leap in turnover next year.

Beyond Confirmed Orders:
While focusing on secured orders, we recognize other promising sectors like water EPC (Wabag and EMS), e-mobility (Olectra), pipe players (Man Industries), pumps (Shakti) and power transmission EPC/cable companies. However, further exploration of these is best saved for future discussions.

Exclusions and Considerations:
We remain cautious towards most infrastructure players due to uncertainties in order book execution over longer time frames (3-5 years) and inherent industry challenges. Similarly, while both the railway and defense sectors have yielded positive returns, most significant opportunities appear played out, apart from select exceptions. Notably, L&T remains a leader, and smaller players like JKIL (metro specialists), PNC Infra (following post-asset sale financial improvement) etc deserve individual scrutiny.

Key Takeaways:
This "Confirmed Order Books" theme offers a valuable framework for navigating market volatility and identifying compelling investment opportunities. Remember, this thesis prioritizes existing orders over management projections of future order wins, providing a layer of risk mitigation. Conduct thorough due diligence, project forward valuations, and maintain a margin of safety to optimize your investment decisions.

Good Luck and a special thanks to Bard (Google AI) for taking my write up and turning it into something more professional and formal.

A few are Maximise candidates and trades for these will be shared on the whatsapp channel.
Link: https://whatsapp.com/channel/0029VaH7AW6H5JLy41Uobm3S

#Maximisepf Update

Entry
1) South Indian Bank (4%).. (Was hoping it'd cool off EOD but it went up instead so smaller allocation)

Tons of changes in #Maximisepf

Entries
1) Added 3% SW Solar
2) Added 5% KPI Green

Exits
1) Confidence Petro
2) Mahindra Logistics

Spicejet
Entered #Maximisepf @ 55.9

I had written this long post in the middle of Dec ‘23 so some analysis might be dated. ATF came down by 4% in Jan ‘24. There is some Carlyle rumour as an investor etc.

Background
The company was sold by the Maran’s to Ajay Singh when the co was near bankruptcy. Ajay Singh is known to have a close proximity to the ruling govt. The co was doing just fine and growing from strength to strength when its main new plane the Boeing 737MAX was grounded globally because of a design flaw by Boeing. This killed the growth of the co as their entire future depended on this one plane. It took almost 2 years for boeing to fix the problem and by then Covid hit and post that crude went on a massive bull run. Basically bad luck after bad luck for this company.
All of this led to the co’s finances getting drained and by 2021 the company reeling from covid couldn’t take deliveries of new planes to increase its fleet. This problem led to defaults with airline lessors and their fleet fell from 75 to 55 planes. The were also struggling with their existing fleet and at one point almost 25 planes in its fleet were grounded which drastically reduced its fleet strength.

Whats changed in the sector?
With multiple bankruptcies in the sector the govt now pays special attention to the sector to aide it as ticket prices are already sky high because of higher supply and demand on many key sectors.
Unlike in the past airlines no-more want to sell tickets super cheap in the name of market share at losses and now don’t want to loose money.

Whats changed in Spicejet?
Last week spicejet announced raising 2250cr from 64 investors. This should help them with their biggest problem which was failure to raise capital.
This should now help them unground planes + take deliveries of new planes.
These ungroundings have helped them add 44 new routes in the upcoming winter schedule.
Add to this now with crude falling from $125 to $70 which should lead to industry pressure on the govt to reduce ATF prices.
I also feel Ajay Singh might manage to get some of the prime routes of GoAir which were money spinners and that might help completely turn the airlines fortunes around.

As the stock price shows, the market and most people in general felt because they were defaulting on payments they too would go under like GoAir did. They got lucky they managed to draw money from a new govt fund to help airlines stay afloat. Now with the fresh capital this risk seems to be negated but the market is still valuing it like it is shutting down.
At current marketcap (3,666cr) its trading cheaper than the money someone would require to start a new airline from scratch with even 5 jets.
For reference Akasa Air which has a marketcap of Sub 2% is valuing itself at $1 billion (8,300cr) in its next fund raising round of $400M.

Risks
If crude were to go up or there were fresh groundings of the planes for any reason then obviously the entire thesis above falls flat on its face. But otherwise the most turbulent days might be behind it and could be smooth flying once a gain going ahead.
Another problem could be their primary plane in operation is the 737-Max which has had safety risks.

I have an existing trade but might add more if it makes a new high. Additionally there is a rumor Carlyle Aviation wants to invest in it but I’d look at it skeptically coz they are a plane leasing company and don’t own any airline around the world. They have a stake in Spicejet coz they converted their debt into equity because of past defaults.

Note: This is a highly stressed company in an extremely challenging sector so keep the risk management extremely tight.

Technicals
Spicejet saw a nice rounding bottom and broke out above 43. Post the funding news the stock shot up to 60 but now cooled off to retest the 200WEMA at 54.

The stock is on the verge of breaking another AVWAP and could potentially be doubled up above 68 if there is a high volume breakout trade which comes about.

Will share the 2nd entry into the Spicejet live on the Whatsapp Channel. As a bonus will do a small Kotyark Ind writeup there too..

Join: https://whatsapp.com/channel/0029VaH7AW6H5JLy41Uobm3S

SpiceJet write posted on the Whatsapp channel
Link: https://whatsapp.com/channel/0029VaH7AW6H5JLy41Uobm3S

Will be posted on the telegram channel at 8:30am tomm.

Iron ores stocks had broken out but now Iron ore prices have cooled off again. So scaling off the above mentioned stocks would make sense.
Could be a demand issue or the fact that shipping transport has got expensive since the Red Sea blockade (Could provide an opportunity in GE Shipping).

Like all good things come to an end..
Sold Inox Wind in #Maximisepf

The combined allocation of Inox Twins was close to 26%..
Bringing it down to only holding onto IWEL @ 17.5% allocation.

The whatsapp channel is finally here...
I have no clue for now what i am going to be doing here..
Overtime i'd like to simply mimic the telegram channel..
But for now i'm sharing short term trade levels on stocks I am actively looking to trade this week..!

Lets see how it goes...

Link: https://whatsapp.com/channel/0029VaH7AW6H5JLy41Uobm3S

Wishing you and your loved ones a happy & prosperous new year..

Stay Blessed..!!

Hope we continue to #Maximise this year too.. 🤞🏼

Another thesis to keep an eye out on..
If GOI reduces Petrol/Diesel rates..

Watch out for Cement & Logistics stocks..fuel is a key RM for both sectors..

Disc: I am playing the cement theme hoping for a NY day gift from the govt. Also Spicejet with the hope ATF prices are sharply slashed.

Iron Ore broke out of a range today and is gone back to $140..

NMDC has already been firing..but watch out for Iron Ore players/Pellet/Billet players who have captive mining. They should do well for a quick trade over the next few days..

Naming a few..
Iron Ore - Ashapura, Sandur, NMDC
Pellet - GPIL, Sardha
Billet - Prakash Ind.

JaiCorp

MH Govt gives permission to build new City next to Navi Mumbai Airport.

https://www.hindustantimes.com/cities/mumbai-news/state-gives-go-ahead-for-building-a-new-city-called-third-mumbai-101702843512250.html

Added Spicejet #Maximisepf
Small 4.8% allocation for now.

Spicejet

Another hated company. Co recently raised 2200cr which gives it the capital it requires. Long post soon.
Growth Curve - The company has not taken delivery of new planes since 2021 because of lalck of funds. Now with the growth capital they can maintain the grounded jets, clear debts with lessors and also take deliveries of new jets. In 2023 their market share went from 7.3% to 4% and now again has risen to 6.2% so the worst might be behind them. They have added 44 new journeys in the winter schedule.

Margin Improvement - With crude trending downwards there are expectations ATF prices will get revised, if that happens the margins will see an auto-uptick that too in the peak holiday season. Also new planes mean higher economies of scale. Unlike the past airlines are not selling tickets are silly loss prices anymore after near bankruptcy by the entire sector.

Valuations - There were fears the airline will go bankrupt like GoAir but once they get the capital they have raised, they survive. This fear has led to rock bottom valuations. If they continue to pick up market share and crude stays where it is, profits are just around the corner and these valuations will look extremely cheap.

Risk: Aviation always depends on crude prices and this is the biggest current risk once they receive the fresh cash infusion. Second risk is if that growth capital doesn’t come.