Prabhudas Lilladher Revises MRPL Target to ₹150 Amid Rising Crude Costs and SAED Pressures

Prabhudas Lilladher Revises MRPL Target to ₹150 Amid Rising Crude Costs and SAED Pressures​

Prabhudas Lilladher has maintained a 'Hold' rating on Mangalore Refinery and Petrochemicals (MRPL) while upwardly revising the stock's target price to ₹150. This revision comes as the company navigates complex operational headwinds including fluctuating crude prices and excise duties.

Mixed Q1FY27 Performance Amidst Geopolitical Volatility​

The refinery reported an EBITDA of ₹13.2bn for Q1FY27, missing both the Professional Estimate (PLe) of ₹10.9bn and the Brokerage Beat Group estimate (BBGe) of ₹15.2bn. The miss was primarily driven by a higher cost of sales resulting from elevated crude prices following the West Asia conflict.

In comparison to the previous quarter's EBITDA of ₹17.8bn, the results reflect significant pressure on margins. However, Adjusted Profit After Tax (PAT) improved significantly to reach ₹5.6bn compared to ₹1.2bn in Q4FY26 and a loss of ₹2.7bn in Q1FY26.

Tax Benefits and Operational Growth Metrics​

The improvement in Adjusted PAT was supported by a lower effective tax rate following the transition to the new tax regime. This structural shift provided an essential cushion for the company's bottom line despite challenging market conditions.

On the operational side, throughput increased 1.8% quarter-on-quarter and 25.9% year-on-year to reach 4.4mmt. While these volumes grew, the implied Gross Refining Margin (GRM) stood at USD8.3/bbl in Q1FY27 compared to the reported GRM of USD11.2/bbl in Q4FY26.

Impact of Special Additional Excise Duty and Future Estimates​

The lower GRM reflects the direct impact of the Special Additional Excise Duty (SAED) on current operations. Looking ahead, analysts estimate GRMs of USD7.8 and USD7.4 per barrel for FY27E and FY28E, respectively.

Projected throughput levels are expected to reach 17.7mmt and 18.0mmt for the respective fiscal years. These estimates suggest a steady production trajectory despite ongoing regulatory challenges.

Valuation and Long-Term Growth Assets​

The revised target price of ₹150 is based on a 6.0x FY28E EV/EBITDA multiple. The research highlights that near-term earnings remain exposed to SAED constraints, which justifies the current 'Hold' stance.

Additionally, MRPL maintains an option value of ₹23 per share for its chemicals project. While this initiative remains several years away from full commercialization, it represents a key long-term value driver for the company.