This stock more than doubled investor wealth just since March
The stock has surged nearly 140 percent since March 2022, from around ₹40 to currently trade around ₹95 per share. In comparison, Sensex has fallen around 4 percent in this period.
PremiumShares of Mangalore Refinery and Petrochemicals (MRPL) have given stellar returns to its investors. The stock has surged nearly 140 percent since March 2022, from around ₹40 to currently trade around ₹95 per share.
In comparison, Sensex has fallen around 4 percent in this period.
The midcap stock touched its 52-week high of ₹95.95 on May 23, 2022, and its 52-week low of ₹37.10 on February 24, 2022. It has zoomed 59 percent in the last one year and risen around 85 percent in 2022 YTD.
Incorporated in 1988 and based in Mangalore, Mangalore Refinery and Petrochemicals Limited manufacture 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, sulphur, and motor gasoline, as well as polypropylene and other products.
In the March 2022 quarter (Q4FY22), the company's net profit skyrocketed over 1,000 percent to ₹3,008 crore against a profit of ₹271.86 crore in the corresponding quarter of the previous fiscal. Its sales also jumped 82 percent to ₹24,803 crore in the March quarter against ₹13,615 crore in the year-ago quarter.
Meanwhile, operating profit climbed 225 percent to ₹2941 crore for the quarter ended March 2022 against a profit of ₹905 crore in the corresponding quarter of the previous fiscal.
On an annual basis, the firm's net profit came in at ₹2958 crore in FY22 against a loss of ₹567.52 crore for the fiscal ended March 2021. Net sales rallied 117.50 percent to ₹69,727 crore in FY22 versus ₹32,085 crore sales in FY21. Operating profit excluding other income climbed 607.65 percent to ₹4930.59 crore in March 2022 fiscal against ₹696 crore profit in the previous fiscal.
Despite the stellar Q4 and FY22 results, brokerage house Kotak Securities have a 'sell' call on the stock. The brokerage noted that the company's Singapore refining margins have increased significantly. It believes such high GRMs are not sustainable in the long run. Besides that, any meaningful fall in crude oil prices might result in inventory losses for refineries, in general, it added.
"We recommend SELL (earlier ADD) on the stock with a revised price target of ₹56/share (earlier ₹50/share). Valued MRPL on a PE multiple of 6x FY24E earnings (unchanged), discount to its peers considering its size, NCI and limited retail distribution," the brokerage said.
Kotak added that it has factored in current higher GRMs and has accordingly increased its earnings forecast for the firm. It now expects MRPL to report an EPS of ₹10.9 in FY23E (earlier Rs.6.8) and ₹9.4 in FY24E (earlier ₹8.3). With the commissioning of desalination plant, one of the major risks faced by the company with respect to water availability is reduced, it added.
Meanwhile, holdings of promoters of the firm remained unchanged at 88.58 percent in the March 2022 quarter. Two promoters held 88.58 percent stake and 3.57 lakh public shareholders owned 11.72 percent in Q4.
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