One of the growth scenarios highlighted in the HDFC Sec report was companyfocusing entirely on MDF in the future. All other non-MDF businesses are already running at over 100% capacity.
Now company needs to take a consious call to whether not to put more money in those existing lines (as that will dilute margins and hurt ROE) and put all incremental capacity & expansions in MDF only (this will slowly improve the product mix in favor of MDFs, improve NPMs, boost ROE)
Given your interactions with clients who are into this business, what according to you are the chances of this panning out ?
If they follow the regular path and expand everything, it will again fall in the vicious cycle of (high capex - low margin - interest & depreciation hurting margins - low roe) saga.