Buy MRPL; target of Rs 82: KRChoksey

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26 Aug, 2025 12:21

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KRChoksey's research report on MRPLMangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of ONGC, is a standalone refinery which operates in the port city of Mangalore, Karnataka. It is strategically located on the west coast of South India, close to the Middle East and Far East crude and product markets. MRPL has a throughput capacity of 15 mmtpa and is now a ‘Mini Ratna, Category 1’ and a Schedule “A” public sector enterprise. The refinery is designed to maximize middle distillates, with the capability to process crudes of various API and with high degree of automation.With the improvement in operational performance, we expect MRPL to deliver profits and thus creating value for shareholders in the coming years. Amalgamation of MRPL with ONGC Mangalore Petrochemicals (OMPL) is positive for MRPL going forward. The management expects the merger will drive up its margins through various product streams. OMPL is situated adjacent to MRPL phase III and it can receive feed stocks directly from MRPL. We believe the GRMs of MRPL will bounce back in the coming years. We have estimated GRMs of US$4.6/bbl and US$5.5/bbl for FY16E and FY17E, respectively. We expect throughput of 14.8 MMT and 14.9 MMT for FY16E & FY17E, respectively. We believe the company could benefit from 1. Stabilization of Polypropylene Unit, 2. Stabilization of OMPL, 3. Completion of crude oil pipeline, which would allow the use of VLCCs and 4. Optimization of its crude basket. We value the stock at 6.0x FY17E EV/EBITDA multiple. We have a BUY rating on the stock with the price objective of INR 82.8/share. Currently stock trades at 3.3x FY17E EBITDA.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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