Motilal Oswal - Mangalore Refinery Petrochemicals Ltd. (MRPL) MOSL: MRPL (Downgrade to Sell)- EBITDA impacted by inventory loss-core GRM at USD7.07/bbl

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Motilal Oswal

Swarnendu Bhushan

MOSL: MRPL (Downgrade to Sell)- EBITDA impacted by inventory loss-core GRM at USD7.07/bbl

â€‹MRPL: EBITDA impacted by inventory loss; core GRM at USD7.07/bbl

(MRPL IN, Mkt Cap USD3.5b, CMP INR127, TP INR113, 11% Downside, Downgrade to Sell)

MRPLâ€™s 1QFY18 EBITDA of INR5.8b (excl. forex gain of INR315m; -52% YoY, -63% QoQ) came in significantly below our estimate of INR7.5b due to inventory loss of INR4.4b (USD2.33/bbl) and higher opex (USD3.3/bb) due to shut down. While interest cost came in at INR1.1b (est. of INR1.2b, -26% YoY, -12% QoQ), depreciation stood at INR1.6b (est. INR1.9b; -4% YoY/QoQ). Other income of INR204m (-91% YoY, -45% QoQ) missed our estimate of INR584m. Effective tax rate stood at 29.5% v/s 33% in 4QFY17 and 37% in 1QFY17. Adj. PAT of INR2.3b (-67% YoY, -73% QoQ) was significantly below our estimate of INR3.3b.
Core GRM at USD7.07/bbl: Including the inventory impact, the company reported GRM of USD4.74/bbl (est. of USD5.5) in 1QFY18 v/s USD5.29/bbl in the year-ago period. Core GRM stood at USD7.07/bbl v/s benchmark Singapore GRM of USD6.4/bbl. Inventory loss stood at USD2.33/bbl in 1QFY18 v/s gain of USD4.72/bbl in 1QFY17.
Crude throughput stood at 3.98mmt (-6% YoY, -3% QoQ), implying 106% utilization in the quarter, as against throughput of 3.66mmt (98% utilization) in 1QFY17.

24/07/2017 8 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.

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INE103A01014 National Stock Exchange of India India

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Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Swarnendu Bhushan

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MOSL: MRPL (Downgrade to Sell)- EBITDA impacted by inventory loss-core GRM at USD7.07/bbl

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

With a more favourable environment, MANGALORE REFINERY improves to Positive

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

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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