Yes it can if they start playing fast and loose with regulations.

For e.g. not issuing payment terms calculations to their borrowers or ignoring KYC requirements etc.

Based on management quality, so far it seems much less viable, but certainly it can happen. Humans are emotional beings, if emotions of greed and feeling powerful/in control ever take over the logic of playing by rules, any management can act stupidly.

This said, recent episodes of IIFL, PayTM and in the past of Bajaj Finance, HDFC Bank, etc. would have caused a lot of managements to introspect their processes and tech stacks to ensure they are in as much compliance as one possibly could in order to avoid regulator’s and investors’ wrath. So this is probably a really good time in invest in quality financials given availability of decent valuations (this doesn’t seem to be the case right now, but valuations are subjective, expensive to me might seem alright to you depending on your time horizon and how far out you are willing to consider growth).

An additional thing that can be used as a gauge of how likely it is that the management would do stupid things is to see how they fared during previous growth outbursts – see 2006-07, 2013-14, etc. If management during those periods stayed calm and didn’t get over excited, it probably is likely that they would stay consistent to their behavior.

I believe Manappuram has largely stayed rational when it comes to LTV and that was one of the reasons they lost material market share to IIFL.
The only time in recent tear where Manappuram did go aggressive was back in 2022 mid when there was some dip in gold prices and they decided to auction a higher portion of gold which led some customers away from doing repeated loans with Manappuram.

I think, ban on IIFL is a big positive for the incumbents and between Manappuram and Muthoot, whoever is a little aggressive here can quickly gain market share.

As an investor who has been eyeing Tata Investment since many years but not bought a single stock yet, although my top two holdings are same as those of Tata Investment – Tata Consumer & Trent…

My Learning are –

• In case of companies with solid & ethical promoters & management, I should not think much when I have an initial idea and take the plunge.
• Be ready for positive surprises from such promoters & management for long term investors
• I missed the strength of unlisted entities TIC holds.
• We cannot value all companies much, as what we know is very little. We can take entry & exit decisions based on individual risk appetite & portfolio strategy.
• There is no guarantee of anything in markets – be it how much stock falls and how much it rises and also when…
• I hope I will buy TIC someday!

I have a big exposure in IDFC First so I could be biased, but my reading of VV is that he would not do anything wrong, not violate any regulations, would be always complaint, and above all, would not like to compromise the image of himself and the bank.

Just one small correction to this statement:

Suzlon does not participate in bidding with SECI. Power producer players do that and they in turn reach out to companies like Suzlon, Inox etc for setting up the wind energy turbine and infrastructure.

If the mandate from Govt is indeed to bring back reverse auction then it can in theory result in many more power producer players jumping in with unviable bids that then do not get converted into actual on-ground infrastructure setup which in turn means Suzlon, Inox etc may not get orders commensurate to the bids awarded by SECI.

Rest of your response content is spot on (as always)!

I exited Suzlon today and Inox a few weeks earlier. Whether that purported letter is true or rumour, given the sky high valuations (both for the market and wind turbine companies in particular), the sentiment damage has been done. Unless we get clear clarification from Govt denying the letter and its content or some major positive news comes in, these shares will continue to trade in a range. Might play upper circuit/lower circuit game for some time. To make any more substantial gains (like doubling from this price point), we need a fresh gush of liquidity to come in, which looks unlikely in short run given that election overhang is also there.

I hope I am wrong in my thought process, but past experience makes me think otherwise! Hence exited for now (was painful to let go) to protect the profits.