Key Takeaways

1. While railway and defense stocks have given a significant run in the last couple of years, they might not provide a great return going forward.
2. Despite the overpriced market, there might still be opportunities in infrastructure stocks.
3. SpiceJet could be an interesting stock to study, taking into consideration its potential as a turnaround stock.

Infrastructure Stocks: Past Performances And Present Opportunities

In the last couple of years, railway and defense stocks have seen substantial growth, providing multibagger returns. However, continued growth might not be on the horizon. Looking at the RVNL stock, for instance, it had a massive run from Rs33 to Rs600, but this increase didn't correlate with a proportional increase in revenue. Despite being intertwined with India's infrastructure narrative, current status suggests that an investment in similar stocks might not provide the desired returns.

Analyzing The Aviation Industry

Revealing another dimension of infrastructure investment, the aviation industry takes the front seat. When looking at Interglobe Aviation, otherwise known as Indigo, it has more than doubled its value in the last two years. An interesting case to look into, however, is SpiceJet. The investment potential in SpiceJet is noteworthy due to its ongoing transformation. After facing numerous issues in 2014, SpiceJet went through a significant upturn from Rs15 to almost Rs150 after a decrease in crude oil prices.

Diving Deeper Into SpiceJet: A Turnaround Story

The market performance of SpiceJet has remained static despite numerous internal challenges that the aviation company is facing. This includes engine failure, employee termination, tax notices, and other issues. Nevertheless, this makes for an interesting case study to understand whether this can be an effective turnaround story.

Key Challenges Of Investing In SpiceJet:

1. Aviation Turbine Fuel Cost: The fuel cost made up 65% of operating expense for SpiceJet, but it's likely to stagnate.
2. Engine Failure Issue: SpiceJet experienced numerous engine failures due to older fleets, but due to pressure from the government, maintenance is now in a better state.
3. Market Share: Indigo was gaining lots of market share, forcing SpiceJet to become unprofitable due to high discounting.

Upsides To Investing In SpiceJet:

1. Regaining Market Share: Despite a downfall, SpiceJet's market share has again started to move up, currently at 8%-8.5%.
2. Reduction of Debt: SpiceJet has actively been reducing its debt, indicating potential recovery.
3. Business Diversification: SpiceJet has been expanding its cargo business, which went from 3.4% to 9% of its total revenues.
4. Potential Expansion: SpiceJet has placed a joint bid to acquire Go First airline, which could further increase its capacity in the future.

In summary, investing in SpiceJet can be a potential opportunity considering its strategic initiatives to turnaround. Additionally, its valuation is not overpriced currently. However, it's crucial for investors to further study this stock and keep it under observation before committing any investment.

Please note this analysis is not a stock recommendation but an insight to help you make informed decisions.