Hold Mangalore Refinery and Petrochem; target of Rs 70: ICICI Direct
ICICI Direct’s research report on Mangalore Refinery & Petrochem
MRPL reported its Q4FY19 numbers that were largely in line with estimates on the profitability front. Revenues declined 12.3% QoQ to Rs 17749.9 crore, above our estimates on higher-than-expected volumes. Crude throughput was at 4.3 MMT in Q4FY19, flattish QoQ. Reported GRMs during the quarter were at US$ 5/bbl, in line with our estimates. Core GRMs were at US$ 3.2/bbl while inventory profit came in at US$ 1.8/bbl. Also, the company reported lower-than-expected other operational expenses and saw forex gains of ~Rs 110 crore. Subsequently, PAT during the quarter was at Rs 318.9 crore against our estimate of Rs 267.6 crore.
However, taking into account the medium term subdued profitability, we value the stock at 5.5x FY21E EV/EBITDA multiple to arrive at a target price of Rs 70.
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