Reliance so far is a favourable reward: Manish Sonthalia

in a chat with ET Now, Manish Sonthalia, VP & Fund Manager, Motilal Oswal Asset Management–PMS shares his view on Reliance:

ET Now: Aside of course the technical factors helping the stock did the discovery changed something materially or fundamentally for Reliance and what is the house view there?

Manish Sonthalia: I think Niko has come out with some reserves estimates and what they seem to indicate and what we believe is that it is a discovery which means something like 1.8-1.9 TCF of gas and it is exactly below the existing discovered fields, it is 2 km below the existing discovered field. You are looking at the reserve size which includes 29% liquids so oil capacity could be something like 2000 barrels per day and in terms of numbers just brief cut numbers include something like Rs 30 per share being included in the Reliance stock price but these are all very basic first cut initiatives that have been taken and some more work needs to be done as to how big this reserve could be but initial estimate seem to suggest something like 1.8-1.9 TCF. Look at it this way, if the refining margins are stable because of closure of capacities etc. which is happening in the Asia Pac region or the petchem remains more or less stable does not fall then it is a pure value play in terms of numbers and valuations. Added to that the retailing venture is now breaking even and Shale Gas and your impending gas price increase on the gas side, these are strong triggers for the stock so if somebody wants to take a minimum amount of rest from let us say three to four year point of view Reliance so far is a favourable reward.