The shares of Mangalore Refinery and Petrochemicals (MRPL) have given excellent returns to their investors. The stock has risen nearly 140 percent since March 2022 Currently around 40 to trade 95 per share.
In comparison, the Sensex has fallen about 4 per cent during this period.
Midcap stock hits 52-week high 95.95 on May 23, 2022, and its 52-week low 37.10 on February 24, 2022. It has grown by 59 percent in the last one year and about 85 percent in 2022 YTD.
Incorporated in 1988 and based in Mangalore, Mangalore Refinery and Petrochemicals Limited manufactures and sells refined petroleum products in India. It is a subsidiary of Oil and Natural Gas Corporation (ONGC). It produces and sells bitumen, furnace oil, high-speed diesel, xylol, naphtha pet coke, sulfur, and motor gasoline, as well as polypropylene and other products.
In the March 2022 quarter (Q4FY22), the company’s net profit grew by over 1,000 per cent. 3,008 crore against profit of 271.86 crore in the corresponding quarter of the last financial year. Its sales also jumped by 82 percent 24,803 crore in the March quarter 13,615 crore in the year-ago quarter.
Meanwhile, operating profit climbed 225 percent 2941 crore profit for the quarter ended March 2022 905 crore in the corresponding quarter of the last financial year.
On an annual basis, the net profit of the firm came to Against the loss of 2958 crores in FY 22 567.52 crore for the financial year ended March 2021. Net sales up 117.50 percent FY22 Vs. 69,727 crore in 32,085 crore sales in FY21. Operating profit excluding other income up 607.65 percent 4930.59 crore in financial year as against March 2022 696 crore profit in the last financial year.
Brokerage house Kotak Securities has a ‘sell’ call on the stock, despite its impressive Q4 and FY22 results. The brokerage said the company’s Singapore refining margin has increased significantly. He believes that such high GRMs are not sustainable in the long run. In addition, any meaningful fall in crude oil prices could result in an inventory loss for refineries in general.
“We recommend Sell (First Add) on the stock with a revised price target of 56/share (earlier .) 50/share). The brokerage said, discount to MRPL at a PE multiple of 6x FY24E earnings (unchanged), considering its size, NCI and limited retail distribution.
Kotak said it has taken into account the current higher GRMs and accordingly raised its earnings estimates for the firm. It now expects to report EPS of MRPL 10.9 in FY23E (earlier Rs.6.8) and 9.4 in FY24E (earlier .) 8.3). It added that with the commissioning of the desalination plant, one of the major risks faced by the company with respect to water availability has been reduced.
Meanwhile, the promoters’ holding of the firm remained unchanged at 88.58 per cent in the March 2022 quarter. The two promoters held 88.58 per cent stake and 3.57 lakh public shareholders held 11.72 per cent in Q4.
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