Kotak Securities sees another 15% downside in MRPL, maintains 'sell' tag

New Delhi: Domestic brokerage firm Kotak Securities remains bearish on Mangalore Refinery & Petrochemicals (MRPL), signalling more pain left in the counter, although the brokerage has raised its target price.

The brokerage has maintained 'sell' tag and a target price of Rs 69 against Rs 56 earlier. The scrip settled at Rs 81.55 on Friday, hitting its 10 per cent lower circuit limit.

The Ministry of Finance on Friday increased export duties on select petroleum products and announced an additional windfall tax on gains made by domestic refineries.

"MRPL made significant investments towards expansion and modernization of its refinery between FY12-15. Despite refinery expansion and modernization, the company failed to improve its financial performance," Kotak said.

The brokerage said global refining margins have improved significantly in Q1FY23 due to ongoing geopolitical issues, lower global petroleum product supply and lower inventory levels in Europe. But it added sustaining elevated margins and GRMs are not likely in the medium to long run.


"Any meaningful fall in crude oil prices might result in inventory losses for refineries," it added.

MRPL, a subsidiary of ONGC, holds 'mini-Ratna status' and is a pure-play crude oil refiner. It has transformed itself into a large and complex refinery with phase-III capacity expansion and has emerged into a much stronger player.

Shares of MRPL have plunged more than 36 per cent from its 52-week high of Rs 127. The scrip has delivered a return of about 90 per cent in the current year so far.

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