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Where Deven Choksey would like to put his money in commodities

Deven Choksey, MD, KR Choksey Investment Managers, tells ET ..

Deven Choksey, MD, KR Choksey Investment Managers, tells ET Now that white metals are his favourite among commodities — both zinc and aluminium

Edited excerpts:
Between Axis Bank and ICICI Bank, what would be your preference?

I am not too sure but both the banks have the ability to do much better business given the new management strategy that will be brought about by the new management team that these companies would have. The optimism would be dependent on the strategy that the companies would come out with. At this point of time, we dont have any particular view on either of these banks. Both banks have significant potential and are available at a valuation discount. With a proper strategy from a committed management, these banks may have the ability to bounce back from the current levels.

Which are your top bets on the commodities side?

We certainly like metal for sure and we believe that both ferrous as well as non-ferrous metals would have relatively better time going forward, particularly the white metals. Both global and local economies are showing signs of improvement. Commodity prices are stable at this point of time and input costs remaining stable provides an opportunity on margins.

White metal commodities — both aluminium and zinc — would be the preferred choice of the commodity to invest in.

How are you looking at the telecom sector? Data about the telecom space highlighted that none of the incumbents have lost market share while Jio has managed to garner 20% market share. Among incumbents, Bharti Airtel has gone up from 30% to 32%. How do you look at the price war on data impacting the future potential of the business?

We will have to look beyond the telecos. The telecom companies including Reliance Jio and the incumbents have created sufficient amount of customer base and to leverage this customer base in the new world order where data economics is going to be prevalent is something which they have to innovate on.

The days of the mobile telephony are gone. Countries like Japan had voice telephony free for last so many years. Now, that has arrived in India. Telecom companies will not be able to earn revenue out of voice as a product any more. Revenue would come from data and application of data which would be travelling on to the network of these telecos. They would have to reinvent themselves as companies supporting data economics.

Jio is favourably placed because they are operating Jio as a platform and targeting mobile telephony customers, ISD customers, cable TV customers, DTH customers as well as wire line customers.

Ultimately on a per customer revenue basis, Jio stands to benefit because of this particular approach that they are creating. I am not seeing a similar approach happening with any of the telecos currently who are operating purely as a mobile telephony operator even at this point of time.

I would say Jio is moving far better on the business model side and the clarity that they are providing vis-à-vis the incumbents. They would take time to generate enough revenue from all these networks but the fact is that I think this business model proposition is extremely strong and could give them the higher amount of visibility and longevity in the business.

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