Sell MRPL; target of Rs 130: Prabhudas Lilladher

Prabhudas Lilladher's research report on MRPL

Mangalore Refinery & Petrochemicals (MRPL) reported lower-than-estimated EBITDA at Rs6bn (down 74.1% QoQ, PLe: Rs8.4 bn) in Q1FY25. PAT came in at Rs0.7bn (down 94.2% QoQ, PLe: Rs2bn). Reported GRM stood at US$4.7/bbl with an inventory gain of US$0.9/bbl. Average Singapore GRM in Q2FY25-TD is at ~US$4/bbl, and we believe GRMs are likely to remain weak in the long term given adequate refining capacity additions in China, India and the Middle East amid weak demand prospects. Post factoring in OMPL and PP-P contribution, we build in a GRM of US$6.8/7.5/bbl for FY25/26E. The stock is currently trading at 19.7x/16.9x FY25/26 EPS and 10.1x/8.3x FY25/26E EV/EBITDA.

Outlook

However, given the weak refining outlook, we maintain our ‘Sell’ rating with a TP of Rs130 (previous TP Rs135) based on 6x FY26 EV/EBITDA.

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