Mangalore Refinery & Petrochem - Q2FY21 Company Update - ICICI Securities

MRPL reported a weak set of Q2FY21 numbers. Operating revenue increased 51.1% QoQ to Rs. 9686.3 crore while oil throughput also increased 36.2% QoQ to 2.5 MMT due to improvement in demand for petroleum products QoQ. Reported GRMs were lifted by inventory gains and came in at US$3.9/bbl. Subsequently, EBITDA was at Rs. 236.6 crore vs. EBITDA loss of Rs. 487.7 crore in Q1FY21. Reported net was at Rs. 35.8 crore vs. Rs. 519.9 crore loss in Q4FY20.

Valuation & Outlook

MRPL's capacity utilisation improved QoQ with increasing demand but it remains lower YoY. 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. Global product spreads have not recovered yet and will continue to affect refining margins. MRPL has further acquired balance stake of 49% for Rs. 1217 crore in its subsidiary OMPL. MRPL's previous investment in OMPL have not paid off and OMPL remains a loss making entity. OMPL reported net loss of Rs. 1400 crore in FY20 and continues to be a drag at the consolidated level. We maintain SELL on the stock and value MRPL standalone refinery at Rs. 18/share (0.75x FY22E BV) and OMPL investment at Rs. 4/share (0.25x FY22E BV) to arrive at a target price of Rs. 22.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_MRPL_CoUpdate_Nov20.pdf

Shares of MANGALORE REFINERY & PETROCHEMICALS LTD. was last trading in BSE at Rs.27.6 as compared to the previous close of Rs. 28. The total number of shares traded during the day was 74610 in over 400 trades.

The stock hit an intraday high of Rs. 28.3 and intraday low of 27.55. The net turnover during the day was Rs. 2076316.

Source : Equity Bulls

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