MRPL hits highest level since Oct 2018; stock more-than-doubles in 2 months

Higher GRMs are likely to benefit from favourable global refining scenario and the MRPL is expected to report healthy earnings in near term, analysts said

Shares of Mangalore Refinery & Petrochemicals (MRPL) continued at their northward movement, surging 9 per cent on the BSE, to hit a over four-year high of Rs 118.55 on the BSE in an otherwise a subdued market on Wednesday. The stock of the refineries & marketing company has surged 31 per cent in the past two trading days on expectation of strong earnings.

At 09:30 am, MRPL was 6 per cent higher at Rs 114.85, as compared to 0.13 per cent decline in the S&P BSE Sensex. The stock exchanges had revised circuit limit on of MRPL from 5 per cent to 20 per cent with effect from Monday.

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 stake. 

The ongoing concerns over the supply of refined products and switch from costly gas to oil, led to a rise in SG complex gross refining margin (GRM) to multi-year high. International Energy Agency (IEA) expects the ongoing Russia-Ukraine war to reduce refining throughput by ~1.1mnbopd. This will result in continued high refining margin till supply concerns abate. Given this, standalone refiners like MRPL stand to benefit the most from rising GRMs, analysts said.

In the past two months, the market price of MRPL has been more-than-doubled or has zoomed 135 per cent after the company reported strong earning for March quarter (Q4FY22). MRPL quoted its highest level since October 2018.

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.

Besides that, the capacity utilization of the refinery improved in Q4 to 116.96 per cent, as compared to 107.50 per cent in Q4FY21, driven by demand recovery. The refinery successfully processed various new crudes such as Tupi Crude (APl-30.2) from Brazil, Amna Crude (APl-37.2) from Libya, Egina Crude (APl-27.6) from Nigeria and Baobab Crude (API- 22.6, High TAN) from Ivory Coast.

"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 the near-term," ICICI Securities had said in Q4FY22 result update.

ONGC Mangalore Petrochemicals (OMPL), a wholly owned subsidiary of the company, was amalgamated with MRPL. OMPL is primarily engaged in operating a petrochemicals project consisting of an aromatic complex situated in Mangalore SEZ for production of Paraxylene, Benzene and other products.