MRPL, Chennai Petroleum soar up to 19% on strong business outlook

Shares of Mangalore Refinery & Petrochemicals (MRPL) and Chennai Petroleum Corporation (CPCL) rallied up to 19 per cent and hit their respective 52-week highs amid heavy volumes on the BSE in Tuesday’s trade in an otherwise weak market.

The rise in the Singapore gross refining margin (GRM) to a record high of $25.2 a barrel bodes well for Indian refiners as they process raw crude into refined products.

Among the individual stocks, MRPL surged 19 per cent to Rs 107.35, while CPCL soared 17 per cent to Rs 374.80. In comparison, the S&P BSE Sensex was down 0.93 per cent at 55,159 at 10:07 am. In the past three months, CPCL has zoomed 234 per cent and MRPL has surged 145 per cent, as against a 4 per cent rise in the benchmark index, on strong earnings.

The trading volumes at these counters jumped nearly three-fold as compared to average trading volumes in past 10 trading days. A combined 24 million shares changed hands at the MRPL counter, and 8.02 million shares on CPCL on the NSE and BSE. The stock exchanges had also revised circuit limit on of these stocks from 5 per cent to 20 per cent with effect from today.

CPCL operates in downstream petroleum sector. It produces an array of value-added petroleum products. MRPL is engaged in the business of refining crude oil, and is a subsidiary of Oil and Natural Gas Corporation Limited (ONGC), which holds 71.63 per cent equity shares.

In January-March quarter (Q4FY22), CPCL reported four-fold jump in its consolidated net profit at Rs 1,002 crore as against Rs 242 crore in Q4FY21. Revenue from operations jumped 43 per cent year on year (YoY) to Rs 20,997 crore from Rs 14,705 crore in previous year quarter.

For Q4FY22, MRPL reported standalone net profit of Rs 3,008 crore as against profit of Rs 268 crore in Q4FY21, supported by higher crude output and better gross refining margins. MRPL took multiple initiatives to improve the revenue from marketing margins in domestic, exports and B2B (business to business) arrangements. Given this, gross revenue from operations grew 36 per cent year on year to Rs 28,228 crore from Rs 20,793 crore in Q4FY21.

Product cracks of transport fuels are currently trading at multi-quarter highs. GRMs are likely to benefit from favourable global refining scenario and the MRPL is expected to report healthy earnings in near term, according to analysts at ICICI Securities.

Meanwhile, Oil and Natural Gas Corporation (ONGC) gained 6 per cent to Rs 162.85 on the BSE. Oil India hit a fresh 52-week high of Rs 288.95, up 4 per cent in intra-day trade today, surging 15 per cent in past two trading days.