5 interpreting crucial investment lessons shared by Pankaj Tibrewal on X
Kotak Mahindra AMC recently shared on his social media platform X (erstwhile Twitter) some essential insights, specifically emphasising the importance of recognizing trustworthy and competent management teams, promoters, and entrepreneurs as a key factor in attaining enduring success in the Indian market. Evaluating management becomes increasingly crucial in the ever-changing realm of mid and small-cap enterprises, where leadership frequently stands as the primary catalyst for growth. Tibrewal firmly asserted how P/E signifies not only “Price/Earnings" but also “Promoter+ Ethics".
Historically, Indian enterprises have been predominantly family-owned and operated. Nevertheless, in recent times, there has been a transition towards companies that are professionally managed. This shift can be attributed to several factors, including the heightened intricacy of businesses, the requirement for specialised skills and knowledge, and the mounting expectations of shareholders.
Although these patterns cannot be universally applied, they do shed light on some noteworthy changes: Pankaj Tibrewal: More management teams and promoters are now well-versed in the intricacies of capital allocation and the associated costs of equity. They understand that skillful capital allocation is both an art and a fundamental driver of value creation. Concepts like Return on Capital Employed (ROCE) and Return on Equity (ROE) have gained broader acceptance.
Interpretation: An increasing number of management teams and promoters in India are becoming proficient in the nuances of capital allocation and related equity costs. They recognise that adept capital allocation is not only a skill but also a critical factor in generating value. Concepts such as
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