On Episode 1023 of The Core Report, financial journalist Govindraj Ethiraj talks to Sushil Choksey, Founder & Managing Director at Indus Equity Advisors.

SHOW NOTES

(00:00) Stories of the Day

(05:00) Oil Markets Brace For Yet Another Tough Week

(08:03) AI Trades Are Unwinding, Could India Benefit?

(08:21) World Bank Study Says India Lifted 496 Million People Out Of Poverty Between 2011 And 2023

(09:43) GST Collections Jump 23% In October, Also Thanks To More Imports

(11:12) Why Reliance’s Share Price Is Held Down And What Could Unlock It

Check out The Core's Earnings Tracker

—

NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Monday, the 2nd of November, and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital. Of course, as we must point out, there are only two months left now in 2026. That's the calendar year. There are a few more months left for the financial year...

The Take

When Dhirubhai Ambani, the founder of Reliance Industries, a company we shall speak about in some detail shortly, died in July 2002, he left behind a sprawling corporate empire and a ticking time bomb. The simmering rivalry between his sons Mukesh, the newly minted chairman, and Anil, the vice chairman, detonated in public in November 2004.

And yet, by June 2005, the family had hammered out a settlement. The truce was largely brokered by their mother, Kokila Bain, alongside veteran banker, K. B. Kamath. The corporate reputation bleeding was stopped and the businesses moved on.

Today, India's markets, as we all know, are watching another bruising and extended boardroom battle, this one at the apex of its most storied conglomerate. The feud between the principal shareholders of Tata Sons and its professional C.O.N. Chandra Sekharan burst into the open on the 12th of August this year. Frustrated by a reappointment process that had been hanging fire since February, Chandra, as many refer to him, announced that he would not seek another term.

And then came the twist. On September 17th, the Tata Sons board unexpectedly re-appointed him as chairman. His original term was to end in February 2027.

Now, the move was and continues to be fiercely contested by Tata trusts, the philanthropic bodies that own 66% of Tata Sons and are represented by Noel Tata. A flurry of leaked missives and press manoeuvring has followed. While the headlines have quietened recently for reasons that will become evident in a moment, the structural paralysis remains.

Technically, the larger shareholder does hold the trump cards, though Maharashtra's charity commissioner, who holds regulatory sway over the state's trusts, including the Tata Trust, has temporarily thrown a wrench into the proceedings. Now, had this dispute been conclusively resolved in the first few weeks, the markets would have digested the outcome and moved on. But a protracted boardroom war is inherently destructive, not just for Tata Sons, but for the 26 publicly listed companies under its umbrella.

A fact that all observers of this spectacle have pointed out ad nauseam. In the early days of a corporate feud, the operational impact is usually limited. We are well past that point.

The heads of Tata operating companies enjoy considerable autonomy, but they still rely on the Tata Sons CEO for strategic direction and green lights on major capital expenditures. Today, those executives are left looking up at a paralysed holding company. Even if advice is forthcoming, they would rightly wonder if the management team delivering it would be there tomorrow and the consequences if that were not the case.

Moreover, over time, executives down the chain are inevitably forced which has further consequences and potential value destruction. This friction is not merely about personalities, it's rooted in strategy. A lot of the tension in the Tata Sons board stems precisely from the massive capital-intensive bets the holding company is making in semiconductors, electronics, and digital businesses.

So the good news is that the mediation efforts have begun involving both internal executives and external arbiters, a report in the Financial Express said two weeks ago, and something this writer has also confirmed independently. Now, this is, of course, logical and to be expected, though, what will matter most is the identity of the personalities driving this mediation and the pace at which they can move. New Delhi is also nervously watching from the sidelines.

The government has leaned on the Tata Group to spearhead India's national ambitions in semiconductor manufacturing, a priority too crucial or critical to be derailed by an executive stalemate. And even if a new group CEO were installed with the same technocratic competence as Chandra, the transition would trigger a period of instability. Time is running out and mediators must therefore move aggressively.

So whatever is the compromise, it's quite likely Chandra will remain, perhaps the term might change. India's corporate history is littered with bitter succession battles and boardroom civil wars and not all of them have been in public domain. While the ability to lean on family patriarchs and matriarchs to dissolve disputes is a uniquely Indian or perhaps Asian corporate strength, professionalised conglomerates also require the same decisive arbitration.

The Ambani's had a mother figure who forced a timely solution to save an empire. To protect its shareholders and its strategic bets, the Tata Group urgently needs to find one of its own.

And that brings us to the top stories and themes...

Oil markets brace for yet another tough week.

AI trades are unwinding, could India benefit?

GST collections jumped 23% in October, also thanks to more imports.

The World Bank study says India lifted 496 million people out of poverty between 2011 and 2023.

Why Reliance's share price is down and what could unlock value?

Markets, Oil, Gold and AI Stocks

Prices of diesel and other fuels are going to stay high as will crude. There were fresh attacks on Russia's oil infrastructure, including one refinery in the Nizhny Novgorod Oblast area on Sunday by swarms of Ukrainian drones. There is enough analysis on Ukrainian drone capability, but the Kostovo refinery, which was the latest to be attacked, is quite far from Ukraine and further up from Moscow.

To get a sense of the impact of oil prices in the month of October, Brent prices were up about 14% in that month. And on Friday, oil prices jumped again to their highest level since April end as the industry braced for an escalation after the US midterm elections, which of course have been promised. Brent crude futures for December, which expired on Friday, were up at $117.60, so almost $118 a barrel over the weekend, according to a Reuters report.

On Friday, another tanker in the state of Hormuz was hit by explosive devices attached by a small boat. Back home, India has raised aviation turbine fuel prices by ₹1.37 per litre, commercial LPG rates by ₹10 per 19kg cylinder, which of course brings us back to the question on when retail prices for petrol and diesel will be raised. Meanwhile, foreign portfolio investors pulled about $3.7 billion from Indian equities in October, making it the second consecutive month of outflows.

Foreign investors have turned net buyers towards the end of the month, though, bringing in a little under a billion dollars in the days between October 26th and October 30th, which is last week, compared to net outflows of ₹2,700 crores in the weekend of October 23rd, a Business Standard report said. Now, with all of this in the backdrop, including foreign buying in the last few days and an unwinding of AI stocks globally, the benchmark indices were higher for the second session. On Friday last week, the Sensex rose 308 points to 74,459, and the Nifty 50 was up 116 points to 23,053.

On Thursday, the Sensex had gone up 905 points. So in two days, that's Thursday and it has now gone up 1,213 points. September quarter results continue to be positive despite cost pressures.

Stock broker Jefferies said in a recent note quoted by Business Standard that of the 105 companies they analysed under their coverage universe, 56% had reported above expectation performance. According to them, their 26-27 MSCI India earnings estimates have been upgraded by one percentage point to 15% so far during the result season, though a few heavy weights are yet to report. You can also track real-time earnings on our own AI-enhanced portal that's earnings.thecore.in, and you will find the link in the description as well.

Meanwhile, if you've not been tracking gold prices off late, do take a look. They hit a one-year low on Friday. Spot gold fell to about $3,880 an ounce on Friday, its lowest level since October 2025, while silver is down about 6.5% to $49, which is going below $15, that's $5.0 in 11 months, a Reuters report said.

On Wall Street, the Nasdaq Composite fell on Friday, and the Dow Jones Industrial Average outperformed as traders moved out of AI stocks and into the more defensive areas of the market, a CNBC report said, adding the tech-heavy Nasdaq lost just under 3%, posting its worst single-day performance since June.

World Bank Study Says India Lifted 496 Million People Out Of Poverty

India saw about 496 million people lifted out of poverty between 2011 and 2023 in one of the world's fastest declines in this metric, Bloomberg quoted the World Bank saying, though the gains it added remain uneven. The share of the population living below the lower middle-income poverty line of $4.20 a day fell from about 58% to about 16% over this period, pushing a little under half a billion people above this threshold, the report said, adding that the reductions were even sharper in the extreme poverty category, measured at $3 a day from about 27% to 2.6%. This was mainly driven by strong consumption growth, rising employment, especially among women, and expanded social transfers, including food subsidies, World Bank South Asia poverty economists wrote in the report.

Employment, on the other hand, increased by about $134 million between 2017 and 2023, though the economists did say that wage disparities remained pronounced, as median earnings amongst the top 10% of workers were about 13 times those of the bottom 10% as of 2023. It also pointed out the recent rise in youth unemployment from about 14.6% in April to June last year to about 15.9% or just under 16% in the same period, that's April to June this year.

GST Collections Jump 23% In October, Also Thanks To More Imports

A sharp jump in increase in imports by about 42% contributed to a 23% jump in goods and services tax collections to about 231,000 crores in October, according to data released on Sunday.

Gross GST collections from domestic sales rose 16% to over 159,000 crore rupees and revenues from imports, as we just said, climbed about 42% to 72,246 crores, as per a Business Standard report. Goods and services tax refunds increased 6.5% year-on-year to about 27,900 crores in October, and after adjusting for refunds, GST collections rose 26% to a little over 200,000 crores in October.

Record Sales in October for Auto?

Most car companies are reporting record sales for the month of October as well, thanks to strong festive demand domestically as well as strong exports.

Tata Motors on Sunday said there was a 23% rise in total sales to about 75,000 units across domestic and international markets. Hyundai on Sunday also reported its highest ever total monthly sales, including exports, a 17.7% or almost 18% year-on-year rise. We will dive into more detailed numbers later this week when the Federation of Automobile Dealers Associations release their numbers, which will give us a slightly better ground sense on consumption.

Why Reliance’s Share Price Is Held Down And What Could Unlock It

On Friday, Reliance Industries reported a near 41% jump in quarterly net profits, beating market expectations thanks to a boost in the strength of its energy and digital services businesses. Reliance shares, however, have fallen about 26% this year, more than double the nifty-fifty's roughly 12% decline, despite the strength in the refining and digital arms as we just mentioned. A Reuters report said that the conglomerate achieved record crude runs at its refining complex, the world's largest.

Despite disruptions in the state of our months, Reliance bought crude from regions including Middle East and North America, limiting the impact of wider Arab Gulf crude differentials and surging freight rates, the Reuters report said. It also redirected fuel exports to more lucrative markets including Africa, Europe, and Latin America, something we at The Core Report have also been reporting, particularly in the context of diesel, and of course, the visit by U.S. Secretary of State Marco Rubio to Jamnagar. Geoplatforms, Reliance's digital services arm, had a strong stock market debut earlier last week and posted a roughly 17% rise in core earnings.

Reliance said that tight fuel markets, stronger petrochemical margins, and robust domestic demand powered a strong quarter for the oils-to-chemical business, which generates more than half of the company's revenue. I reached out to Sushil Choksey, founder and managing director of Indus Equity Advisors, and a Reliance watcher for several decades, and I began by asking him if oil-to-chemicals was now making a comeback of sorts in the Reliance portfolio, and also, what could help bring the share price back up.

INTERVIEW TRANSCRIPT

Sushil Choksey: Govind, thanks for having me on the show and happy Diwali in advance for the listeners and your team. Reliance, as a story, if you look since inception, was a polyester chain converting to plastic value-added products, means basic plastic manufacturing complex at Hazira and then moved to Jamnagar. Today, it's an oil giant from a perspective where global or domestic investors are concerned, which is processing 2% of global crude at Jamnagar and the throughput for this quarter was 20 million plus and if you look at annualised basis, their throughput is 80 million tonnes plus crude and the value-added products comprising between jet fuel, diesel, petrol, so there are two refineries, one is for domestic and one is SEZ. So the domestic refinery is being taxed based on the Government of India norms on petrol, diesel, the other one is not taxed. The result of the current quarter where the EBITDA was 25,000 crores and if you look at the first half, 42,000 crore EBITDA is clearly visible from the Nelson complexity which Reliance is able to manage almost at 21-22% which is best in the world.

If you compare with refineries like Frontier, Valero, Sunco, which are all US-centric and few Asian refineries too. So Reliance is on top of the world with the top 2-3 refineries in the world and maybe one of the best in the world with the engineering marvel of maintaining such refinery complex at the best. So if your question was Reliance, Oil to Chemical is the cash cow for every business which Reliance has spun out or is creating today and Oil to Chemical, this year I wouldn't be surprised based on the current situation which no Indian would like to see in the globe where the world is going to continue and that makes more profit for Reliance.

But I wouldn't be surprised the current quarter diesel exports from India are higher, US State Secretary has already visited, he's seeking oil specifically diesel or value-added products from India. Polyester chain for Reliance in the same complex as Denver and they are less dependent on NAFTA and they're importing ethane. So the cracks are more beneficial to them where production of even plastic chain is concerned.

So they can spin out almost one lakh crore on this asset of Oil to Chemical and if you value that one lakh crore today with the replacement cost plus the margin, I don't know why the stock value per share in Reliance Oil to Chemical should be less than six seven hundred rupees a share where the stock itself is 1165. I think Oil to Chemical is the business which the world would notice and maybe for next three five years till electric takes over the entire diesel market which doesn't seem so even in China today. Reliance will have a role to play and maybe the new refineries which are late, some are damaged, may not be able to sustain today's market condition.

Govindraj Ethiraj: Right, so let me ask you a stock price question and then come back to the fundamentals. So Reliance shares are down about 26 percent this year. Now this is almost double of what the Nifty 50 has fallen which is about 12 percent and that's despite all these trends that you've pointed out though some of those trends obviously have got accentuated after the war started.

What's your sense on how the market has been perceiving Reliance and can that change?

Sushil Choksey: See, the problem of the stock value is more because Reliance is perceived as a holding company, specifically after Jio listing, they had announced and now Jio platform is listed. So the value of 66% ownership in Reliance Telecom, that is Jio platform, is not given the market value by the holding. People are valuing at 30%, 40%, everyone individually.

And a lot of people would have sold Reliance and if you wanted to only own Telecom, they would have shifted into that stock by rotation. And same applies to Reliance Retail today, thinking that Reliance Retail will be listed and Reliance Industry will still remain a holding company where it is 83%. And the new energy business is 100% captive and oil to chemical is again 100%.

So making a combination of all the businesses. Today the holding company concept is more applied to this company like Aditya Birla Group where Grasim was concerned and the valuation model is bit challenging from my mind. Is it that Reliance would list all these companies at a future date, spin out each individual company to shareholders because family that is Mukesh Ambani and family owns 50.44%. Once the listing discovery happens, will the demerge happen? But if it remains a holding company, that discount applies in India unlike the West. And that is a challenge where the stock price is concerned. And that is the reason you're seeing the stock underperformance.

Market was expecting Reliance to do well but not as good as what each division has reported specifically oil to chemical. And I think it should reflect in the price maybe in a day or two that Reliance will stop underperforming the market because trade seems to be moving towards India re-emerging on their far desk.

Govindraj Ethiraj: Right and if we look at the listing of geo platforms which happened last week, now there has obviously been value created from what you're saying is that all the subsidiaries should ideally now be listed, one of which has, so as to help the markets find individual value for these companies and then award another set of value or a value to Reliance which is the parent. And that seems like a long runway, doesn't it?

Sushil Choksey: I think Reliance retail IPO should be 12 to 24 months again. And by that time, new business, new energy business, which is 20 gigawatt of solar polysilicon to module business, 40 gigawatt of this, which will be more of captive power for green hydrogen manufacturing. So the entire complex will move from oil to chemical to more of green businesses on a global scale.

And they want to be carbon neutral by 2035. Looking at the pace, which is being accelerated, it can be achieved ahead or not. That only time will tell us.

But today the commentary is very clear that the potential of all the three divisions likely will do well. So I'm keeping it simpler for the viewers and listeners that telecom stays as it is today. It's 130-140 billion dollar value.

That is 13-14 lakh crore market cap. Reliance retail, again, people are estimating it's valued somewhere around 120 billion with 83 percent ownership, whatever you account for. And oil to chemical needs to re-rate.

So combining all the three divisions, hopefully retail will list. And possibly after that, you may see some story emerging out in the media that there's some thinking of de-merger and Reliance shareholders get both the shares which Reliance is holding because Ambani family owns 50.44 percent. And it's possible that they can hike their stake also in near future because the market is not supporting value.

And for the cash flow, what they have, they may have justification to increase their own stake to maybe 55 percent. This is my mind thinking. I have no understanding from anybody in the marketplace.

Govindraj Ethiraj: And can you explain to us quickly the pros and cons of a de-merger versus a subsidiary listing as we've seen right now?

Sushil Choksey: See, if all the three businesses are listed separately and the shareholder owns, then I have a choice whether I want to own oil to chemical, which is a super profit today. Telecom is a sustainable business irrespective of the global situation because the telecom usage, based on the current pricing, where 218 rupees are true and Bharti is at 260. The headway in terms of positivity, this cannot get to 250 and 300 in two years.

Lesser time, more time, the bandwidth, 45 GB is a consumption per person. People are moving from 2G to 4G and now 5G. Maybe India emerges as 6G in early phase.

The telecom would be richly valued and potential and telecom usage is going to increase as India is a large consumer. Every individual on their mobile phone is watching movies and OTT and cricket matches or CNBC or any other channel. So looking at it, potential for telecom from a revenue angle or profitability angle, it is very sustainable from next two, three or five year outlook.

So telecom business will remain healthy. Retail with urbanisation and luxury and retailing. Everybody wants last minute delivery.

So business models are changing. Reliance has also created a FMCG fast moving Kajuba division separately, called out Tampa Cola and few other brands which they have acquired and what they are creating. That itself is being talked about 1 lakh crore.

So my personal take is sooner or later, I don't know whether it happens in two years, three years, five years. Reliance should have three listed companies, that is Reliance industry, oil to chemical along with new energy, retail as a separate company and a telecom as a separate company. That's the true value of Reliance would emerge for shareholders till that time.

You will have to go with EV to EBITDA and assigning to subsidiaries a value based on whole core discounting.

Govindraj Ethiraj: So you're saying effectively six companies in all? No, three companies only. Three companies that's emerged from within Reliance industries.

Sushil Choksey: Reliance industries, oil to chemical along with new energy business, that is hydrogen, solar and all the addition what they do, including power, which is capital. Reliance retail and third remains Jio. The consumer becomes part of Reliance retail.

Govindraj Ethiraj: Right. And there's financial as well somewhere.

Sushil Choksey: Financial is already listed, but ambition is too large, size is too small for a shareholder today on a comparative to likewise peer companies. I'm not saying it won't get big. It will get big, but it's already listed.

So that is the value assigned to the entire market cap is less because today it owns 5% of Reliance. So the valuation is rich. But from a standalone business perspective, the ambition and the visibility can be 10 times.

Yes, it is because that's the company's potential. They can garner resources, whether it's from banks, capital market, global, and they can lend. But the thing is that if you overnight double the book, the market won't like it because you don't know what kind of NP is run through the system and the products.

I think they're building blocks for those businesses, whether it's mutual fund, insurance in future, lending against shares, broking, various variety of products, SME lending, gold finance, whatever they want to. It has a possibility of becoming the next Bajaj finance. But today's perspective, the valuation is already discovered.

Jio is already discovered. Retail is yet to be discovered and oil to chemical needs to be revalued based on the future outlook.

Govindraj Ethiraj: Last question, and it's really to do with future outlook. So now all these bets, whether it's retail or telecom, telecom, of course, happened much earlier. Retail was later.

New media, media, all of that were made with a view on capitalising on future behaviour, consumer behaviour, trends, and so on, which is what all such bets are. But it does appear when you look back or even in perfect hindsight that the traditional oil to chemical business has become even stronger for reasons one may not have expected or projected at that time. But given the fact that that has changed now, given the fact that oil is going to be such a critical and crucial resource, almost like AI computing is for the West, do you think that Reliance needs to change strategy here and go even bigger on the refining and related expansions and investments?

Sushil Choksey: I think the consumption of oil is not rising at the pace which was expected a decade back. So Reliance, I don't know the refinery which is being projected is going to be put up in Texas, which Mr. Trump is announcing, but Mukesh Ambani has not made any statement about it, neither of the Quadras result, whether they become a consultant to implement the refinery, they get some kind of a management advisory role or they manage the refinery, they implement as a project, we have no idea on it.

But it can be a crucial role from an investor being somebody else and management remains with somebody else, can be a big game changer from an earning perspective where Reliance is concerned and the capability which they have created over almost 30 years of business in oil to chemical is concerned. But the thing is that true potential of oil to chemical is still not being visible because the government of India's taxes to subsidise or fuel sales in India is being supported by one refinery out of two. So the true potential of a profit is not visible.

At the same time, we need to watch Reliance as a more consumer play out of India because telecom is a consumer, retail is a consumer play, television is a consumer play, finance is a retail play and what they manufacture in Reliance oil to chemical, petrol, diesel, plastics, plastics are being consumed in car manufacturing or any other products, polyester for textile, again a consumer play. So it's a pan-India consumer play. So if India's GDP which is at 4.3 trillion has to get to 10 trillion over a period of time, the business's consumption growth on these segments are not going to diminish, they're going to be incrementally higher. At 7.5-8% GDP, does Reliance market share on this oil divisions get double in three years or five years? It's based on their vision and what capacity they enhance. It is very visible that PTA and paraxylene and polyester capacity Reliance is hiking because the consumption trends in India per person, consumption on variety of products compared to Europe and US is one-fifth or one-fourth or even one-tenth or one-twentieth depending where it's concerned.

At the same time, the entire cash flow of Reliance is being diverted to new businesses. They've also already gone and signed up for hydrogen with Samsung, the solar and best. They may be late in the business compared to the Chinese manufacturer like Longy, putting up the capacity, but captive consumption of 20 gigawatt or 40 gigawatt and then capturing other markets.

India wants to be carbon-free and if India has to reduce energy consumption, this is a vital division. So big conglomerates will divert their potential to harness this division and I think Reliance is well-placed to do that.

Govindraj Ethiraj: Right. That's a good note to end on, Sushil. Thank you so much for joining me.

Sushil Choksey: Thank you.