Company Update - Mangalore Refinery & Petrochem - ICICI Securities

MRPL reported a weak set of Q4FY20 numbers on the profitability front. Operating revenue increased 4.8% QoQ to Rs. 17545.1 crore while oil throughput declined 6.6% QoQ to 3.8 MMT. Reported GRMs disappointed and came in at -US$4.5/bbl, impacted by inventory losses. Subsequently, EBITDA loss was at Rs. 1922.1 crore vs. EBITDA profit of Rs. 299.7 crore in Q3FY20, also impacted by Rs. 508.9 crore forex loss. The company reported net loss at Rs. 1596.4 crore vs. Rs. 36.6 crore loss in Q3FY20.

Valuation & Outlook

The nationwide lockdown due to spread of Covid-19 has reduced capacity utilisation of the company and will impact its near term performance. On the business front, MRPL plans to augment its capacity from 15 MMTPA to 18 MMTPA over the next few years. However, the last expansion project to increase complexity as well as capacity did not achieve desired results. Also, weak global product spreads will affect refining margins thereby affecting profitability. MRPL's investment in OMPL has also not paid off. It continues to be a drag at the consolidated level. We downgrade the stock from REDUCE to SELL with a target price of Rs. 25/share (~0.5x FY22E BV).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_MRPL_CoUpdate_Jun20.pdf

Shares of MANGALORE REFINERY & PETROCHEMICALS LTD. was last trading in BSE at Rs.32.15 as compared to the previous close of Rs. 33.1. The total number of shares traded during the day was 89572 in over 636 trades.

The stock hit an intraday high of Rs. 33.15 and intraday low of 31.5. The net turnover during the day was Rs. 2921354.

Source : Equity Bulls

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