Thanks for your views, you have articulated current state of Bajaj Hindustan (BH) very well. In fact your views have given me fresh perspective to look at the company differently.
As most leveraged player is the biggest winner in commodity upcycle, BH may turn out to be the most rewarding company if cycle turns, but I don’t have any insights if and when it will happen.
Survival risk for highly leverage player in commodity market is big concern for me. However, the company is able to survive during last 15 years in extremely difficult times, and current challenges are much smaller compared to the past. Monetization of non core assets (power plant), though not materialized in the past, still remains a lever to deleverage the company. Overall I see low solvency risk.
Secondly, with hindsight bias, I can say that capital allocation has been extremely poor in the past (augmenting huge capacity with large debt which did not worked out). But people learn from mistakes and BH may get extremely cautious in the future.
Your last statement “stock remains a high-risk, high-reward play” is where difference in our approach lies. I like venturing in “Low Risk, High Reward play” and believe market provides such opportunities once in a while. BH will not fit that criteria, though it may prove to be a exceptional investment in the future based on the above points I highlighted.