Sell Mangalore Refinery and Petrochemicals; target of Rs 124: Prabhudas Lilladher

Prabhudas Lilladher's research report on Mangalore Refinery and Petrochemicals

Mangalore Refinery & Petrochemicals (MRPL) reported lower-than-estimated results with an EBITDA loss of Rs4.7bn in Q2FY25 (vs EBITDA of Rs6.1bn in Q1, PLe EBITDA: Rs0.9bn, BBGe EBITDA: Rs3.5bn). Net loss came in at Rs6.8bn (vs PAT of Rs0.7bn in Q1, PLe net loss: Rs3.1bn, BBGe net loss: Rs1.2bn). Reported GRM stood at US$0.55/bbl with an inventory loss of US$2.93/bbl. Average Singapore GRM in Q3FY25-TD continues to remain weak at ~US$3/bbl amid demand concerns. We believe these weak GRMs would persist in the long term too given adequate refining capacity additions in China, India and the Middle East and weak demand prospects. We build in a GRM of US$4.3/7.5/7.5/bbl for FY25/26/27E.

Outlook

The stock is currently trading at 12.8x/12.8x FY26/27 EPS and 6.9x/6.5x FY26/27E EV/EBITDA. We maintain ‘Sell’ rating with a TP of Rs124 based on 6x avg FY26-27 EV/EBITDA.

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