Hold Mangalore Refinery and Petrochemicals; target of Rs 137: Prabhudas Lilladher

Prabhudas Lilladher's research report on Mangalore Refinery and Petrochemicals

Mangalore Refinery & Petrochemicals (MRPL) reported better-than-estimated results with an EBITDA of Rs10.3bn in Q3FY25 (vs EBITDA loss of Rs4.7bn in Q2, PLe: Rs4.1bn, BBGe: Rs8.1bn). PAT came in at Rs3bn (vs net loss of Rs6.8bn in Q2; PLe Net Loss:Rs1.1bn, BBGe PAT:Rs1.7bn). Reported GRM stood at US$6.2/bbl with an inventory gain of US$0.03/bbl. Throughput came in flat QoQ at 4.6mmt. Average Singapore GRM in Q4FY25-TD has softened to ~US$3/bbl amid decline in product cracks. While near-term weakness persists, we believe GRMs will rebound to US$5-7/bbl in the long term. Accordingly, we build in a GRM of US$4.1/7.5/7.5/bbl for FY25/26/27E.

Outlook

The stock is currently trading at 10.9x/10.9x FY26/27 EPS and 6.1x/5.7x FY26/27E EV/EBITDA. Factoring in the near-term weakness we downgrade our rating from ‘Accumulate’ to ‘Hold’ with a TP of Rs137 based on 5x FY27 EV/EBITDA and adding the option value ofRs45 to its chemicals foray.

For all recommendations report, click here