Q2FY19 highlights
Key positives: Refining thruput implies >100% utilisation
Key negatives: Weak GRMs, forex loss and continued issues with secondary processing units
Impact on financials: Cutting FY19/20E EPS by 17/28% to factor sharply lower margin assumptions and marginally lower thruput. TP cut to Rs90.
Valuations & view: Cut to Neutral
MRPL has seen Quarterly performance become exceedingly volatile, with technical issues at secondary units, forex and crude prices making earnings extremely unpredictable. Additionally, while management is guiding to much more stable operations at its refinery over H2FY19e, the refining margin environment itself has turned bearish in recent months, with the lower crude prices to contribute to inventory loss also in Q3, even though in the longer term, refiners would benefit via lower F&L costs. Taking cognisance of the weaker H1 (vs Est) and a muted environment for Q3-Q4 as well, we have sharply cut our GRM assumptions and lowered target EV/E multiple as well, underpinning our 31% cut to price target and a downgrade to Neutral.
Mangalore Refinery and Petrochemicals Limited is a holding company .The Company is engaged in the business of refinery and manufacturing of refined petroleum products. Its segments include Domestic Sale and Export Sale. The Company is involved in the production of liquid or gaseous fuels, illuminating oils, lubricating oils or greases or other products from crude petroleum, and manufacture of other petroleum products, such as bitumen. Its products include pet coke, liquefied petroleum gas, fuel gas, mixed xylene, high speed diesel (HSD), vacuum gas oil (VGO) and automatic transmission fluid (ATF). It operates retail outlets under the HiQ brand. It has design capacity to process approximately 15 million metric tons per annum and over two hydrocrackers producing diesel. It has over two catalytic reformers producing unleaded petrol of high octane. It offers petroleum and petrochemical products to consumers in various industries, such as mining, power, agriculture, fertilizers and paint.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.