I had bought Pokarna as a long term investment bet. But because of the unknowables and certain amount of guess work involved it more or less panned out as a trading bet for me as I kept entering and selling etc.,.
I had a decent allocation and then first sold at 1050+ in the later half of last calendar year as unknowables didn't justify me giving the allocation that I had (matter of personal comfort ofcourse). But around Feb-March entered again due to correction but after March result again sold out around 960+ as from March'16 results my assumption of them operating full or near full capacity was becoming stronger (1 important unknowable was becoming knowable) and I had no clue about future capacity additions (2nd important unknowable). Never sold out fully and always had some allocation.
As stated in earlier posts, QUANTUM of capacity addition (along with time taken for new capacity to come on stream) was the most important factor for me to be able to decide if I should hold on and/or buy more.
The concall made it pretty clear on personal front that I should sell out whatever I have.
@varadharajanr Mgmt. had said that they are operating around 80-85% capacity and if I heard correctly then they also said that they are doing 3 shifts. Mgmt. also said that in this business 80-85% capacity is the maximum that they can do. Even if we take into account the 5-10% additions to EBITDA due to efficiency improvements as a result of rebalancing (which gets completed in December'2016) and add another 15-20% as per your assumptions still would it be worthwhile to buy or hold it at cmp is the question that one needs to answer for himself. I personally discounted any uptick due to increased utilisation going by the results of last 3 qtrs and mgmt. commentary. Also discounted any price rise on its quartz slabs as I felt if they could then they would have done it and it should have reflected in last couple of quarter's results.
Any new capacity addition can only add to the numbers fully by FY20 and partially (for 3 months) by FY19 assuming that they start the capex work in December'2016 and given that it takes 2 years to set up new lines etc.,. (although I am not sure on this 2 year part as wondering if they ever said that fresh set up takes 2 years and incremental capacity addition may take less than 2 years).
None the less above information was enough for me to exit fully as I was interested only in Quartz business and didn't want to justify my holding by basing it on any improvements in Granite biz or exiting apparel biz.
Would keep it on watchlist.
Discl: No holdings as on today.