Neutral MRPL; target of Rs58: Motilal Oswal

Motilal Oswal's research report on MRPL

MRPL reported a miss on our EBITDA and PAT estimates, with the company posting a GRM loss of USD4.46/bbl. Refining throughput stood at 3.96mmt (v/s our est. of 3.22mmt; 3.24mmt in 2QFY22 and 4.29mmt in 1QFY23).  MRPL achieved its highest ATF production in Sep’22 (178tmt v/s previous peak of 170tmt in Dec’18). Reformate Cargo of 30tmt from aromatic complex was dispatched for the first time in Aug’22. MRPL also achieved its highest ever Sulphur dispatch of 36.76tmt in the domestic market in Sep’22. Singapore GRM declined to USD7.1/bbl QoQ in 2QFY23, led by a decline in all the product cracks including Gasoline, Gasoil and ATF. This was in sharp contrast to what we saw in 1QFY23 (SG GRM at USD21.4/bbl) and highlights that a sustained good performance remains a concern given the highly volatile macro environment at present.

Outlook

Multiple initiatives are in place to improve the contribution from marketing margins in both domestic and export markets along with the B2B segment. However, our doubt still remains strong on the capability of the company to deliver sustainable earnings. Considering the above factors, we maintain our Neutral rating on the stock with a TP of INR58.

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MRPL - 31-10-2022 - moti