Sell Mangalore Refinery & Petrochemicals Ltd For Target Rs.143 by Prabhudas Liladhar Capital Ltd
EBITDA, PAT below estimate on weak Q4
Mangalore Refinery & Petrochemicals (MRPL) reported a weak Q4FY26 performance with EBITDA coming in below estimates at INR17.8bn, vs INR27.8bn in Q3FY26 (PLe: INR31.6bn, cons: INR33.2bn) driven by higher employee costs and other expenses which included a forex loss of INR6.1bn. PAT declined to INR1.2bn (PLe: INR16.7bn, cons est: INR19.2bn) vs INR14.5bn in Q3FY26 and INR3.6bn in Q4FY25. Throughput fell to 4.4mmt vs 4.7mmt in Q3FY26. MRPL met its target to open 250 retail outlets in FY26, reaching 252 outlets. As indicated in previous concall, MRPL plans to raise its marketing presence, targeting expansion of retail outlets to 1,000 over the next five years. We estimate a GRM of USD7.7/7.4/bbl for FY27/28E. The stock is currently trading at 7.8/7.7x FY27/28E EV/EBITDA. We downgrade the stock to ‘SELL’ from ‘ACCUMULATE’, with a revised target price of INR143 (earlier INR192), based on 6.0x FY28E EV/EBITDA. The downgrade reflects an increase in debt. We continue to assign an option value of INR22 for the chemicals foray, which remains a few years away from commercialization.
Throughput declined QoQ:
Throughput declined QoQ to 4.4mmt from 4.7mmt in Q3FY26. On FY26 basis, throughput fell to 17.0mmt in FY26 from 18.2mmt in FY25, reflecting a YoY decline. While throughput remained relatively strong during Q2FY26 and Q3FY26, it was subdued in Q1FY26 and Q4FY26, indicating uneven operational performance across the year.
EBITDA and PAT were lower QoQ:
EBITDA fell to INR17.8bn in Q4FY26 from INR27.8bn in Q3FY26, primarily driven by a higher forex loss of INR6.1bn and a sharp increase in employee costs of 66% QoQ.
FY26 EBITDA and PAT improved:
EBITDA and PAT improved significantly YoY, rising to INR62.4bn and INR19.3bn in FY26, compared to INR22.9bn and INR0.5bn in FY25, driven by stronger crack spreads.
FY26 retail outlet target achieved:
MRPL added 85 retail outlets in FY26, taking the total network to 252 outlets, marginally ahead of its 250 outlet guidance. Based on Q3FY26 concall, MRPL aims to expand to 500 outlets in the next 3 years and ~1,000 outlets in the next 5 years.
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