Sell MRPL; target of Rs 175: Motilal Oswal

Motilal Oswal's research report on MRPL

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%. Further, we are modeling a throughput of 17mmt in FY25/FY26, in line with the company guidance.

Outlook

The stock is currently trading at FY26E EV/EBITDA of 8.2x, which is significantly above its long-term average of 7x. Additionally, the dividend yield is expected to be a meager 1.2% (each) in FY25 and FY26 at the current price. Our GRM assumption of USD8/bbl from 1QFY25 onwards is also at the higher end of what the company has delivered historically. We value the stock at 6.5x FY26E EBITDA of INR61b to arrive at our TP of INR 175. We reiterate our SELL rating.