Mangalore Refinery And Petrochemicals Ltd. share price target

MRPL’s 1QFY26 EBITDA came in significantly below our estimate, as its reported GRM of ~USD3.9/bbl was lower than our estimate of USD7.5/bbl. Adjusting for inventory gains, core GRM stood at ~USD5.9/bbl.

Mangalore Refinery & Petrochemicals (MRPL) had a partial shutdown in the quarter due to which, throughput declined from 4.6mmt in Q4FY25 to 3.5mmt. Decline in oil prices resulted in inventory loss of USD2/bbl, worsening the reported GRM from USD6.23/bbl in Q4FY25 to USD3.9/bbl. Higher shutdown related costs further worsened EBITDA to Rs1.8bn (Ple Rs11.8bn, BBGe Rs10.9bn, -70% YoY, -84% QoQ). Poor EBITDA resulted in PAT loss of Rs2.7bn...

Mangalore Refinery & Petrochemicals (MRPL) reported better-than-estimated results with an EBITDA of Rs11.3bn in Q4FY25 (up 9.6% QoQ; PLe:Rs9.7bn, cons est EBITDA: Rs8.4bn). PAT came in at Rs3.6bn (up 19.4% QoQ; PLe:Rs2.6bn, cons est:Rs1.9bn). Reported GRM stood at US$6.2/bbl with an inventory gain of US$0.42/bbl. Throughput came in flat QoQ at 4.6mmt. Average Singapore GRM in Q1FY26-TD continues to remain soft at ~US$3/bbl amid weakness in product cracks. While this near-term weakness is likely to persist, we believe...

MRPL’s 4QFY25 EBITDA beat our estimates by 34%, as reported GRM came in ~USD1/bbl above our estimates at USD6.2/bbl. Adjusting for inventory gain, core GRM stood at ~USD5.8/bbl.

MRPL delivered a substantial miss vs. our estimates in 1QFY25 due to a weak refining performance, with GRM/throughput coming in 32%/7% below our estimates.

While MRPL delivered a solid beat vs. our estimates, we believe its earnings
are set to decline from 1QFY25 amid weaker SG GRM QoQ. We are building
in a GRM of USD8/bbl in FY25/26, leading to an RoE of 18.2%/15.4%.

Singapore GRM improved to USD6.1/bbl QoQ in 3QFY22, led by an improvement in gasoline, ATF, and naphtha cracks. It stands at an average of USD5.9/bbl in Jan'22, as demand continues to outweigh supply. The macro environment remains strong. We believe the current high GRM is...

MRPL reported lower than estimated EBITDA and PAT. Refinery throughput was in line with our estimate at 3.2mmt (+27% YoY), implying a utilization rate of 86%. Continued concerns over utilization rates keeps margin under pressure, with higher OPEX (USD2.8/bbl in 2QFY22), impacting profitability. Reported GRM stood at USD2.22/bbl, with core GRM at USD1.69/bbl (est. of USD1.5/bbl and negative core GRM in FY21 and 1QFY22). Consolidated/standalone net debt stood at INR244b/INR187b at the end of 1HFY22 (up from INR238b/INR182b at the end of FY21.)...

MRPL's capacity utilisation improved QoQ with increasing demand and surpassed pre-Covid level. However, capacity utilisation reduced during the current quarter (Q1FY22E-TD) due to declining demand. On the business front, MRPL has plans to augment its capacity from 15 MMTPA to 18 MMTPA over the next few years. However, last expansion project to increase complexity as well as capacity did not achieve desired results. Global product spreads have not fully recovered yet and will continue to affect refining margins. MRPL's previous investment in OMPL have not paid off....

The nationwide lockdown due to spread of Covid-19 has reduced capacity utilisation of the company and will impact its near term performance. On the business front, MRPL plans to augment its capacity from 15 MMTPA to 18 MMTPA over the next few years. However, the last expansion project to increase complexity as well as capacity did not achieve desired results. Also, weak global product spreads will affect refining margins thereby affecting profitability. MRPL's investment in OMPL has also not paid off. It continues to be a drag at the consolidated level. We downgrade the stock from...