To start with my experience in cyclical is limited and most people on Prakash here will know a lot more than I do. My only cyclical play has been DCM Shriram in Sugar and it was scary. It made me realize I dont have a bend of mind that can handle cyclicals and not certainly in the middle of the cycle. From what I have learnt from seniors Cyclicals can be played in two ways:
a) Buying a huge discount to the book, something like buying a dollar for a dime (say quarter) and exiting at the book or a little premium to the same with a ton of patience.
b) Tracking the supply side which I think is difficult but done correctly the cost of capital can be avoided.
The following is not a rebuttal but purely from my learnings in last few years where I have tracked cyclicals.
Anyone playing a cyclical whether it may be paper/graphite /steel will have and seek reasons to remain stay put, more like confirmation bias. Has happened to me in Sugar where at some point of time I started tracking daily prices on NCDEX.
Look at the larger players like Tata/JSW/Mittal their cost of capital is significantly low, creating a huge disadvantage to players like Prakash. Prakash’s rates should not be used as a benchmark for the steel industry.
As I said I do not track the segment, in all likelihood Jiten Bhai and you are more likely to be right.
Go back look at FY17Q2/FY17Q3 sugar companies, the promoters/the analysts and some marquee investors too had no clue about Q4. My only suggestion is to not to take them too seriously.
Discl.: No holding in sugar/steel/graphite. The above are generic views and should not be considered an opinion on Prakash Industries.