Both Reliance and ONGC will benefit from gas price hike: Deven Choksey

In a chat with ET Now, Deven Choksey, MD, KR Choksey Securities, shares his views on the RIL AGM and the gas pricing issue. Excerpts:



ET Now: What are your views on the gas pricing issue based on what was doled out at the RIL AGM?

Deven Choksey: We cannot sustain having oil & gas prices that are not commensurate with international market prices. Also, since we are already importing gas at a higher cost and if that price is not rationalized, then the domestic producers would not be able to bring new investment into the system. As a country, we would be bleeding.

Therefore, according to me, it is a given that a price hike would be given by the government, with a retrospective effect from the date at which it was supposed to be executed. To my mind, this would probably be good for both Reliance as well as ONGC which are waiting to benefit from the price hike.

ET Now: Reliance said it is confident of doubling its retail business every three to four years. Do you think this is achievable?

Deven Choksey: Having invested so significantly into the consumer chain of businesses, including retail and telecommunication, I feel Reliance has basically been successful in bringing up the retail business to the profit level in a relatively shorter period of time.

Within the retail chain of business, the different formats, that they have been able to successfully launch, are an indicator that the company has expanded significantly at the backend. Therefore, it will be natural for this company to expand in a manner that its chairman has stated, that is, to newer format and at the same time breach the geographical reach.

To my mind, the retail business could grow at a fast pace. If I have to add a view point here - the digital format would help retail business to grow faster in an offshore model, which will drive business much faster at the rate of 40% to 50% CAGR going forward. Therefore, it is going to be a good rewarding proposition in the coming times for the company - at least in the next two or three years, there should be a quantum jump into the contribution to the bottom line profits from this activity alone.