Result Update: MRPL - ACCUMULATE - TP Rs.138 - Kotak

- MRPL reported lower than expected quarterly performance. It has reported a PAT of Rs.2.34 bn in Q1FY18, significantly lower both sequentially and yoy mainly due to lower crude throughput, lower GRMs (inventory losses), rupee appreciation and higher other expenses. MRPL's refining margin stood lower at US$4.74/bbl in Q1FY18 as compared to US$8.25/bbl in Q4FY17 and US$10.01/bbl in Q1FY17 due to inventory losses. Similarly, crude throughput was lower at 3.98 mmt, down 6% qoq. We expect Singapore GRMs to improve in H2FY18 due to seasonal factors.

- Going ahead, we expect MRPL's profitability to improve on account of i). Improved product mix, ii). Better refining margins iii). Economies of scale, iv). Forward integration - Polypropylene plant and v). Various tax benefits.

- We have revised earnings downwards to reflect weaker margin and rupee appreciation. At current price of Rs.127, the stock is trading at 7.9x P/E and 1.9x P/B multiples on FY19E earnings. We maintain ACCUMULATE recommendation with a revised price target of Rs.138 (earlier Rs.144), valuing it at 5.5x FY19E EV/EBIDTA. We expect stock to remain in focus on the news flow of merger with HPCL, we opine.

Shares of MANGALORE REFINERY & PETROCHEMICALS LTD. was last trading in BSE at Rs.119.6 as compared to the previous close of Rs. 126.5. The total number of shares traded during the day was 988829 in over 8108 trades.

The stock hit an intraday high of Rs. 123.8 and intraday low of 117.9. The net turnover during the day was Rs. 119799181.

Source : Equity Bulls

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