MRPL shares rally over 6%; YES Securities sees better Q2 on improving refining margins
Mangalore Refinery and Petrochemicals Ltd
(
MRPL
) climbed as much as 6.4% on Wednesday to Rs 154 on the BSE, lifting their two-day rally to 10.6%, as investor sentiment improved on expectations of a recovery in earnings and a more supportive margin environment.
MRPL's gains pushed its market capitalisation to Rs 26,709.61 crore. Despite the recent uptrend, the stock remains 31.5% below its 52-week high of Rs 224.80, touched in July 2024, though it has rebounded 55.6% from the 52-week low of Rs 98.95 recorded in March 2025.
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Brokerage Yes Securities retained its 'buy' rating on the stock following the company's first-quarter results last week, raising its price target to Rs 180 from Rs 160. The new target implies a valuation of 1.9 times FY27 estimated price-to-book value.
Q1 earnings weighed by shutdowns
MRPL had reported a consolidated net loss of Rs 271.97 crore for the quarter ended June 2025 (Q1FY26), reversing from a net profit of Rs 73.22 crore in the same period last year. Revenue from operations fell to Rs 20,988.03 crore from Rs 27,289.40 crore year-on-year.
Yes Securities attributed the earnings weakness to extended shutdowns and inventory losses. The company's gross refining margin (GRM) came in at $3.88 per barrel for the quarter, significantly below the brokerage's forecast of $7.3 per barrel. In comparison, MRPL had reported GRMs of $6.23 per barrel in the previous quarter and $4.70 per barrel a year ago.
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The underperformance was linked to a 45-day Phase-II shutdown—longer than anticipated—driven by severe rainfall, as well as lower plant utilisation and limited feedstock availability that hit product exports.
Q2 outlook better
Looking ahead, Yes Securities said the company is positioned to benefit from an uptick in refining spreads in the second quarter, supported by elevated diesel cracks and geopolitical risk premiums on crude following the Israel–Iran conflict. With Brent crude averaging around $70 per barrel, the brokerage expects near-term GRMs to remain firm in the first half of FY26.
The brokerage also highlighted MRPL's advantageous crude sourcing mix, with over a third of its supply sourced from Russia at discounted rates, helping it maintain some of the highest GRMs among single-location Indian refiners.
Longer-term growth and merger outlook
Over a three-year horizon, Yes Securities sees earnings quality improving as MRPL moves further into petrochemicals and retailing, while capitalising on integrated operations and upcoming pipeline infrastructure. Demand for value-added products is projected to outpace fuel demand, with the company targeting stable leverage despite elevated capex levels. MRPL's net debt-to-equity currently stands at 0.99x, with debt at Rs 13,230 crore.
A potential merger with
Hindustan Petroleum Corporation Ltd
(HPCL), while speculated in the past, remains unlikely in the near term, the brokerage said. Any such move would depend on the promoters,
ONGC
and HPCL, and may be deferred beyond FY27 due to tax-loss carryforwards from the OMPL merger.
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