Motilal Oswal's research report on MRPL
MRPL’s 1QFY18 EBITDA of INR5.8b (excl. forex gain of INR315m; -52% YoY, -63% QoQ) came in significantly below our estimate of INR7.5b due to inventory loss of INR4.4b (USD2.33/bbl) and higher opex (USD3.3/bb) due to shut down. While interest cost came in at INR1.1b (est. of INR1.2b, -26% YoY, -12% QoQ), depreciation stood at INR1.6b (est. INR1.9b; -4% YoY/QoQ). Other income of INR204m (-91% YoY, -45% QoQ) missed our estimate of INR584m. Effective tax rate stood at 29.5% v/s 33% in 4QFY17 and 37% in 1QFY17. Adj. PAT of INR2.3b (-67% YoY, -73% QoQ) was significantly below our estimate of INR3.3b.
Outlook
We believe that the refinery should be able to report GRM of USD6.2/6.5/bbl in FY18/19. The stock trades at 10.8x FY19E EPS of INR11.7 and EV of 5.8x FY19E EBITDA. We value the stock at EV of 5.5x FY19E EBITDA to arrive at a fair value of INR97/share for the standalone refinery and add INR16 for OMPL. Our fair value stands at INR113. Peak valuations leave no room for upside, in our view. Downgrade to Sell.For all recommendations report, click here
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