Hold Mangalore Refinery & Petrochemicals Ltd For Target Rs.180 Prabhudas Liladhar Capital Ltd
Strong refining performance drive EBITDA beat
MRPL’s Q2FY27 EBITDA beat estimates at INR32.8bn (PLe:INR23.3bn; BBGe: INR30.2bn), vs INR13.2bn in Q1FY27, driven by lower QoQ crude procurement costs and elevated refining cracks. Implied GRM stood at USD14.8/bbl, vs USD8.3/bbl in Q1FY27 and USD9.1/bbl in Q2FY26. Adj. PAT, after excluding the exceptional loss arising from the fire incident, improved to INR19.7bn from INR5.6bn in Q1FY27. Throughput declined 5.6% QoQ and YoY to 4.2mmt, primarily due to maintenance shutdowns during the quarter. Following the strong 1HFY27 performance, we raise our FY27E GRM assumption to USD11.3/bbl vs USD7.8/bbl. However, we expect GRMs to normalize to USD7.4/7.5/bbl in FY28E/FY29E as geopolitical disruptions ease and refining cracks revert towards normalized levels. We maintain “HOLD” rating while revising our TP to INR180 (earlier: INR165), based on 6.0x Sep’28E EV/EBITDA. We continue to assign an option value of INR23/share to the chemicals project, which remains several years away from commercialization.
Throughput declined, but implied GRM improved:
Throughput declined 5.6% QoQ and YoY to 4.2mmt, primarily due to an expected maintenance shutdown during the quarter. However, calculated implied GRM improved to USD14.8/bbl from USD8.3/bbl in Q1FY27 and USD9.1/bbl in Q2FY26, driving the stronger than expected EBITDA performance. SAED during the period was an average of USD3.3/bbl on MS and USD32.6/bbl in HSD
EBITDA beat estimates: EBITDA increased to INR32.8bn in Q2FY27 from INR13.2bn in Q1FY27, supported by lower crude procurement costs and other expenses. MS cracks averaged USD31.4/bbl, broadly flat QoQ at USD31.6/bbl in Q1FY27 (net of SAED), but significantly higher than USD9.5/bbl in Q2FY26. HSD cracks rose to USD38.7/bbl from USD20.4/bbl in Q1FY27 (net of SAED) and USD18.8/bbl in Q2FY26. Implied crude procurement costs declined to USD96.3/bbl from USD116.1/bbl in Q1FY27, although remaining elevated versus USD70.8/bbl in Q2FY26.
Half yearly EBITDA and PAT improved YoY: Strong refining cracks supported robust 1HFY27 performance, with EBITDA growing ~1.7x YoY to INR46.0bn and Adj.PAT rising to INR25.3bn from INR3.7bn in 1HFY26.
Fire Incident at Phase 3 of refinery: MRPL recognized a provisional loss of INR1.2bn due to the fire incident at its Coker Hydrotreater unit, including damage to assets and inventory losses. The damaged assets have an estimated replacement value of ~INR2.25bn and are adequately insured; the final loss and insurance recovery remain subject to assessment
Please refer disclaimer at Report
SEBI Registration number is INH000000933
