MRPL Q1 Results Review - Weak Gross Refining Margins Drag Earning: Prabhudas Lilladher

Prabhudas Lilladher Report

Mangalore Refinery and Petrochemicals Ltd. reported lower-than-estimated Ebitda at Rs 6 billion (down 74.1% QoQ, our estimate: Rs 8.4 billion) in Q1 FY25. Profit after tax came in at Rs 0.7 billion (down 94.2% QoQ, our estimate: Rs 2 billion). Reported gross refining margin stood at $4.7/barrel of oil with an inventory gain of $0.9/bbl.

Average Singapore GRM in Q2 FY25-to-date is at ~$4/bbl, and we believe GRMs are likely to remain weak in the long term given adequate refining capacity additions in China, India and the Middle East amid weak demand prospects.

Post factoring in ONGC Mangalore Petrochemicals Ltd. and PP-P contribution, we build in a GRM of $6.8/7.5/bbl for FY25/26E.

The stock is currently trading at 19.7 times/16.9 times FY25/26 EPS and 10.1 times/8.3 times FY25/26E EV/Ebitda.

However, given the weak refining outlook, we maintain our ‘Sell’ rating with a target price of Rs 130 (previous target price Rs 135) based on six times FY26 EV/Ebitda.

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