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Prabhudas Lilladher Report
Mangalore Refinery and Petrochemicals Ltd. reported higher than estimated Ebitda at Rs 23.4 billion (up 98% QoQ, our estimate: Rs 16.3 billion). Profit after tax came in at Rs 11.4 billion (up 194% QoQ, our estimate: Rs 5.7 billion).
The beat on estimates was led by strong gross refining margins at $11.4/barrel of oil.
The company declared a final dividend of Rs 2/share. The stock is currently trading at nine times FY26E enterprise value/Ebitda.
Average Singapore GRM in Q1 FY25-TD is at ~$4/bbl and we believe GRMs in the long term are likely to remain weak given adequate refining capacity additions in China and India amid weak demand prospects.
Thus, we factor in a GRM of $6/6/bbl for FY25/26E. Maintain ‘Sell' rating with target price of Rs 138 based on six times FY26 EV/Ebitda.
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