Mangalore Refinery And Petrochemicals Ltd. share price target

Reported 3QFY20 GRM was higher than expected at USD3.19/bbl (v/s - USD0.63/bbl in 3QFY19). Dependence on the Nethravathi River until the desalination plant comes on stream in 2021 would also adversely impact performance; reiterate MRPL reported an EBITDA gain of INR2.8b in 3QFY20 (v/s est. INR0.4b and loss of INR4.9b in 3QFY19), as reported GRM stood at USD3.19/bbl v/s loss of -USD0.63/bbl in 3QFY19. PBT stood at loss of INR0.45b and the company recognized deferred tax assets of INR83m for the quarter (totaling to INR5.7b in 9MFY20). At the PAT level, the company reported a loss of INR0.37b (v/s loss of INR2.6b in 3QFY19). For 9MFY20, reported EBITDA stood at a loss of INR4.3b v/s gain of INR12.6b in 9MFY19; PAT loss was INR11.1b v/s INR130m gain in 9MFY20. In 1QFY20, due to fresh water shortage from the Nethravathi River, MRPL was forced to close its refining units for ~75 days (similar issue faced in 2012 and 2016 also).

In addition to large capacity addition in lieu of higher IMO-led diesel demand, Chinese teapot refineries have ramped up their utilization rates (~67% vis--vis 61% in Oct-Nov18) as the country increased crude oil import More importantly, with IMO less than a month away, the forward curve for diesel depicts an incapacitated scenario of a mere USD14-16/bbl, as against consensus estimate of USD25-30/bbl. MRPL suffered refinery shutdowns in 1HFY20, leading to lower utilization (6.2mmt in 1HFY20 v/s 7.8mmt in 1HFY19) and poor GRM (USD0.13/bbl in In 1QFY20, water scarcity in Mangalore led to a major forced shutdown of 75 days. Nevertheless, in 2QFY20, MRPL faced another (precautionary) shutdown of the phase-III units after intensified monsoon caused landslide in Dakshina Given subdued global oil demand and incremental capacity addition, GRMs will likely remain suppressed for a few more months. Originally, it was expected that the INR150b phase-III expansion would generate ~USD8/bbl of GRM when SG GRM is at USD6/bbl.

MRPL reported its Q1FY20 numbers, which were below our estimates on the profitability front. Revenues declined 36.9% QoQ to | 11200.1 crore and came in below our estimates of | 11405.4 crore on account of lower oil throughput. GRMs during the quarter were at negative US$0.4/bbl vs. US$5/bbl in Q4FY19. They came in below our estimate of US$2.5/bbl. Oil throughput at 2.6 mmt was lower than our estimate of 2.8 mmt on account of force majeure shutdown due to water supply shortage and refinery...

MRPL reported its Q4FY19 numbers that were largely in line with estimates on the profitability front. Revenues declined 12.3% QoQ to | 17749.9 crore, above our estimates on higher-than-expected volumes. Crude throughput was at 4.3 MMT in Q4FY19, flattish QoQ. Reported GRMs during the quarter were at US$5/bbl, in line with our estimates. Core GRMs were at US$3.2/bbl while inventory profit came in at US$ 1.8/bbl. Also, the company reported lower-than-expected other operational expenses and saw forex gains of ~| 110 crore. Subsequently, PAT during the quarter was at | 318.9 crore...

MRPL reported its Q3FY19 numbers, which were impacted by high inventory losses. Revenues increased 14.2% QoQ to | 20249.6 crore on higher volumes. Crude throughput was at 4.4 MMT in Q3FY19, up 5% QoQ and came in above our estimate of 4.2 MMT Reported GRMs during the quarter came in at US$ -0.6/bbl above our estimate of -US$3.1/bbl. Core GRMs were at US$4/bbl while inventory losses were at -US$4.6/bbl (our estimate of -US$7.7/bbl) Subsequently, loss during the quarter was at | 267.7 crore against...

7 February 2019 Core GRM of USD4.0/bbl came in marginally higher than our estimate of USD3.88/bbl. However, inventory loss was much higher, resulting in an EBITDA loss of INR5b, as against our estimate of a gain of INR1.2b. Forex gain stood at INR3.8b v/s INR2b in 3QFY18 and a loss of INR4b in 2QFY19. Led by inventory losses, MRPL reported a net adjusted loss of INR2.6b, as against our estimate of a gain of INR322m. v/s benchmark Singapore GRM of USD4.3/bbl, USD6.8/bbl in 3QFY18, and USD2.29/bbl in 2QFY19. Inventory loss stood at USD4.63/bbl, resulting in a loss of USD0.

Until Aug'18, several secondary units of the refinery faced technical issues, which have been resolved; since then, the refinery is running at its optimal capacity. If crack spreads are normalized, we expect refining margin at ~USD8/bbl including the benefit from PPU.

MRPL reported Q2FY19 numbers, which were below our estimates on the profitability front. Revenues increased 6.9% QoQ to | 17732.9 crore (our estimate of | 18393.7 crore). Crude throughput was at 3.9 MMT in Q2FY19, flat QoQ, slightly above our estimate of 3.7 MMT Reported GRMs during the quarter came in at US$ 4.4/bbl below our estimates of US$8.6/bbl. Reported GRMs include inventory gains, which were at US$2.1/bbl (our estimate of US$3.2/bbl) Subsequently, loss during the quarter was at | 81.2 crore against our...

14 November 2018 2QFY19 due to lower-than-expected GRM. The company booked a forex loss of INR4.0b v/s a loss of INR670m in 2QFY18 and INR3.9b in 1QFY19. MRPL booked a net exceptional item of INR251m on account of (a) estimated cost for purchase of Renewable Energy Certificate (REC) from the Indian Energy Exchange (IEX), (b) employee benefit expense and (c) income tax credit. It reported a loss of v/s benchmark Singapore GRM of USD6.1/bbl, USD5.33/bbl in 2QFY18, and USD4.79/bbl in 1QFY19. There was a shutdown of 11 days in the delayed coking unit (DCU) and the polypropylene plant, which is likely to have affected performance. (+11 YoY, +2% QoQ), implying 104% utilization in the quarter (v/s 3.53mmt in 2QFY18 and 3.85mmt in 1QFY19).

ICICI Securities Ltd | Retail Equity Research MRPL reported its Q1FY19 numbers, which were below our estimates on the profitability front. Revenues declined 11.6% QoQ to | 16582.7 crore and came in below our estimate of | 19465.2 crore. Crude throughput was at 3.9 MMT in Q1FY19 vs. 4.3 MMT in Q4Y18 and came in slightly above our estimate of 3.7 MMT Reported GRMs during the quarter came in at US$8.3/bbl below our estimate of US$8.8/bbl. Reported GRMs include inventory gains of...