IDFC Securities - Mangalore Refinery Petrochemicals Ltd. (MRPL) MRPLs Q3FY18 results (Outperformer) - A strong quarter, helped by inventory gains

Report

IDFC Securities

MRPL's Q3FY18 results (Outperformer) - A strong quarter, helped by inventory gains

Q3FY18 result highlights

Recurring PAT of Rs9.7bn for the quarter up 71% yoy. Reported EBITDA of Rs17.5bn (+52% yoy, IDFCe Rs10.2bn).
Net Earnings above estimates of Rs6bn primarily due to higher refining thruput of 4.5mt (IDFCe 4mt) and higher GRMs of US$9.3/bbl (IDFCe US$8.4/bbl).
PPU unit gradually stabilising post the problems with the delayed coker unit in Q2, expected to run at 100% in FY19E.
Inventory gains of US$2.5/bbl. Resultant, core GRMs of US$6.8/bbl was above IDFCe US$6.5/bbl.
Refining thruput of 4.49mt for the quarter implies 120% utilisation. We note that distillate yield >75% over 9MFY18, and PPU volumes are expected to go up to 100kt run rate per quarter over the next few quarters.
9MFY18 EBITDA/PAT of Rs32.4bn/Rs17bn vs 9MFY17 EBITDA/PAT of Rs31.5bn/Rs17bn despite inventory gains of Rs8.9bn in 9MFY17 vs Rs5.3bn in 9MFY18.
The yoy improvement in EBITDA despite lower gains is due to core GRMs of US$6.5/bbl vs US$5.8/bbl in 9MFY17.

Key positives: Strong utilisation and higher core GRMs yoy/qoq

Key negatives: PPU unit yet to get back to full utilisation.

Impact on financials: Unchanged post the results.

Valuations & view

MRPL is on a structural growth path, with this quarter also helped by inventory gains of Rs5.2bn, with performance of the refinery reflecting the improved configuration and higher capacity which is complimented by an improved crude sourcing slate. With the improvement from the PPU unit yet to kick in fully (utilization of the PPU plant estimated @90% for FY19) and the intent to reduce F&L below 10% by end of FY18E, we see further uptick in GRMs over FY18-19E. Coupled with the expected turn to profitability for subsidiary OMPL, profitability for MRPL should continue to expand over the next 2 years. Valuations of 6.9x FY20E EPS/4.2x EV/EBITDA underplay the strong growth in profitability and a potential dividend yield of 4% (30% pay-out on FY19E standalone EPS implies Rs5/sh pay-out, FY17 pay-out at 35%). Reiterate outperformer.

02/02/2018 6 EN

Underlying

Mangalore Refinery & Petrochemicals Ltd.

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.

See profile

INE103A01014 National Stock Exchange of India India

Provider

IDFC Securities

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.

See profile

Other Reports on these Companies

Motilal Oswal

MOSL: MRPL (Neutral)-Strong 1QFY23, but consistency is key

MRPL reported a strong beat on EBITDA and PAT (due to a higher reported GRM of USD24.4/bbl). Refinery throughput was in line at 4.3mmt (up 40% YoY), implying a utilization rate of 114%. The amalgamation of MRPL with OMPL from 1st Apr’22 led to strong synergies in the production of Para-xylene, Benzene, and other products. This is a bold move, but profitability remains a concern in the long run. Singapore GRM improved to USD21/bbl QoQ in 1QFY23, led by an improvement in gasoline, gasoil, and ATF cracks. This resulted in a surge in reported GRM to USD24.4/bbl (up ~4.5x YoY). Amid various oth...

EUR 120.00

July 29, 2022 July 29, 2022 8 EN

TheScreener

With a more favourable environment, MANGALORE REFINERY improves to Positive

MANGALORE REFINERY (IN), a company active in the Exploration & Production industry, is favoured by a more supportive environment. The independent financial analyst theScreener has confirmed the fundamental rating of the title, which shows 3 out of 4 stars, as well as its unchanged, defensive market behaviour. The title leverages a more favourable environment and raises its general evaluation to Positive. As of the analysis date February 4, 2022, the closing price was INR 47.45 and its potential was estimated at INR 53.72.

Free Trial

February 5, 2022 February 5, 2022 1 EN

Motilal Oswal

MOSL: MRPL (Neutral)-Better than expected core GRM, but concerns remain

MRPL: Better than expected core GRM, but concerns remain (MRPL IN, Mkt Cap USD1b, CMP INR42, TP INR46, 9% Upside, Neutral) Reported 3QFY20 GRM was higher than expected at USD3.19/bbl (v/s -USD0.63/bbl in 3QFY19). However, MRPL's GRMs have not always been good on a sustainable basis; at times it has been hit by water woes and at times, by technical issues. Also, SG refining margins have been under pressure due to large incremental supply glut amidst tepid global demand. Poor refining margins to continue for few more months. Dependence on the Nethravathi River until the desalination pla...

EUR 120.00

February 5, 2020 February 5, 2020 8 EN

GMR Infrastructure's Q3FY20 results (Outperformer) - Air traffic growth improved at the airports; deleveraging process gains momentum

Q3FY20 result highlights Airport traffic recovered in Q3FY20 with Delhi Airport witnessing a 7% yoy growth in passenger (vs 5% decline in H1FY20) and Hyderabad Airport reporting a 9% growth in passenger traffic (vs 4.9% in H1FY20). Note that traffic was subdued in H1 because of Jet Airways shutdown of operations. GMR Infrastructure (GMR) revenues grew by 11% yoy to Rs16.7bn aided by strong non aero revenues growth of 12% and 138% yoy growth in rental revenues. EBITDA for airport business was Rs6.7bn, +28% yoy Energy Business - Warora and Kamalanga PLF for Q3FY20 was 81% (vs 75% in Q3FY1...

February 24, 2020 February 24, 2020 12 EN

Bhoomika Nair

Bhoomika Nair

Ambuja Cement's Q4CY19 results (Outperformer) - In line; cost efficiencies at play

Q4CY19 result highlights Adj PAT +54% yoy to Rs4.55bn: was above estimates on lower tax (shifted to new tax regime) while operational performance was in-line. Volume increased 6.7% yoy: to 6.54mn tons led by pickup in demand in North and East, growing ahead of industry (mkt share gains). Realisations +2.7% yoy: to Rs4795/t due to sharp price hikes across regions in 1HCY19. This was further augmented by 14% yoy growth in premium products. Hence, revenue was up 9.5% yoy to Rs31.4bn. However, on a qoq basis realisations fell by Rs198/t (-4% qoq) as prices have corrected across regions from p...

February 24, 2020 February 24, 2020 6 EN

Nitin Agarwal

Nitin Agarwal

Event update: Aurobindo Pharma (Outperformer) - Unit IV receives EIR; positive outcome

Event Unit IV has received an Establishment Inspection Report (EIR) with Voluntary Action Initiated (VAI) status by USFDA Key highlights With the receipt of this status, FDA will now start granting new ANDA approvals from this facility. Notably, in mid-November, the USFDA had conducted a surprise inspection for nearly 10 days in Unit 4, post which it had issued 14 observations. While our read of the observations suggested that most of these were primarily procedural, market has been concerned around potential escalation of the issues into an OAI which, in turn, would have impacted revenu...

February 24, 2020 February 24, 2020 4 EN

Sign-up for free to access full reports immediately

Email Address*

Choose Password* ( 6 or more characters )

Due to regulatory restrictions regarding the distribution of financial research, this report is restricted to a specific region or investor type. Get access to exclusive reports by answering the questions below.

Select your country*

Get financial insights straight to your inbox

By clicking "register" you accept the Terms and Conditions & Privacy Policy

Already on ResearchPool?

Almost there...

Are you a professional investor?

Select your country

REGISTER

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

In order to access this report please create an account.

LOGIN