Yes, Amey that would be the most prudent strategy but not because it has been dud for a year but because of following reasons. I must admit, it was a wrong call and I did pay tuition fees for the same! Some key learnings
1) Pricing power is extremely important. In this case HIL has hardly any pricing power as it operates in hyper competitive industry no matter whichever segment you take. Inspite of being leader and having 60% market share in some of the markets, it can't raise prices so when RM and operating cost goes up there is no other option but to take a hit on bottom line. Very difficult to grow bottom line significantly (2X-3X in 5 years) in such environment
2) Take management guidance/goals with handful of salt...With all good intentions and plans, dynamic business environment can prove them completely wrong! The growth of increasing sales to 2000 crores seems very optimistic given current conditions. AAC blocks as product are gaining tremendous traction but so are number of manufacturing units for AAC! Now HIL is planning to enter CPVC market...will it work? I don't know. But it surely doesn't instil confidence
3) For a mediocre business, profit is not necessarily converted into cash, rather most of the time it goes towards building inventories and increasing credit lines to customers! So, sustaining dividend (leave alone increasing) becomes question mark.
Having said all this, I still believe that in next 5 years, one will make decent returns as eventually things will improve. So with dividend yield of 2-4% chipped in, getting 15% return may not be a tall task. But the upside is limited. So to me why play a game, where tail's I don't lose, but heads I don't gain either!