Share price of this ONGC subsidiary has zoomed over 100% in 3 months

The stock price of Mangalore Refinery & Petrochemicals (MRPL) hit a new high of Rs 240 as it surged 18 per cent on the BSE amid heavy volumes.

Shares of Mangalore Refinery & Petrochemicals (MRPL) hit a new high of Rs 240, as they surged 18 per cent on the BSE in Thursday’s intra-day trade backed by heavy volumes. The average trading volumes at the counter jumped nearly four-fold. A combined 57.27 million equity shares changed hands on the NSE and BSE till 02:04 pm. In past three months, the stock price of state-owned refineries & marketing company has more-than-doubled or zoomed 103 per cent.

In past one month, MRPL has rallied 42 per cent, after the company reported profit after tax (PAT) of Rs 387 crore in December quarter (Q3FY24). The company had posted a loss of Rs 188 crore in a year ago quarter (Q3FY23). GRM improved to $5 bbl from $3.88 bbl. In comparison, the S&P BSE Sensex was down 2 per cent during the period.

MRPL is a subsidiary of Oil and Natural Gas Corporation Limited (ONGC). ONGC and Hindustan Petroleum Corporation (HPCL) held 71.63 per cent and 16.96 per cent, respectively. Out of the remaining 11.42 per cent holding, retail individual shareholders held 5.65 per cent stake, followed by foreign institutional investors (2.55 per cent) and mutual funds (1.33 per cent), the December 2023 shareholding pattern data shows.

MRPL aspires to capture the domestic retail market to the tune of 1 mmtpa. The company has already initiated advertising for 1,800 retail outlets, which are expected to be completed soon. Additionally, MRPL expects to add 500 outlets over the next three years. In Phase 1, the focus will be on South India, followed by expansion into West and North India in Phase II.

SG GRM has rebounded to $2/bbl during Q4FY24’td after declining 42 per cent QoQ to $5.5/bbl in Q3FY24. The SG GRM trend highlights that a sustained good performance remains a concern, given the highly volatile macro environment. Motilal Oswal Financial Services forecast a GRM of $8/bbl from Q4FY24 onwards, which is on the higher side compared to the company’s historical performance, the brokerage firm said in result update.

MRPL’s operational performance remained healthy in April to December period (9MFY24) although the throughput of 106.6 per cent was lower than 113 per cent in 9M FY2023 owing to a mandatory maintenance & inspection shutdown during the current fiscal. The gross  refining  margin (GRM) in 9MFY24  improved to $10.6/bbl  as  against  $8/bbl  in  9MFY23.  However, in Q3FY24, GRM moderated to $5/bbl due to the moderation in the crack spreads for auto fuels. The GRMs are likely to remain subdued given the moderation in the crack spreads of major petroleum products.

The ratings are constrained by the asset concentration risk of being a single-location refinery and the sensitivity of the profits to import duty differential, commodity price cycles and INR-USD exchange rates. The Stable outlook on the [ICRA] AAA rating reflects ICRA’s opinion that MRPL will continue to benefit from its established position in the domestic energy sector, ICRA said in its rationale.