MRPL - A SOLID BUY

 MRPL 

NSE : MRPL   BSE : 500109  CMP :  76.60

TARGETS:  94.00, 117.00, 142.00 in short medium and long terms

Mangalore Refinery and Petrochemicals (MRPL) established in 1988. It was a joint venture between Hindustan Petroleum Corporation (HPCL) and IRIL and associates (AV Birla Group). Its initial capacity was 3 million metric tonnes per annum.

In March 2003 it was acquired by ONGC. Its current capacity is 9.69 million metric tonnes per annum.

It has received ISO 9001:2000 and ISO 14001:2004 certification for quality management system and Environmental management system.

MRPL a subsidiary of ONGC is only refinery to have 2 hydrocrackers that produces premium diesel (High Cetane).

It manufactures wide range of products such as liquefied petroleum gas, Naphtha, Motor gasoline, Aviation turbine fuel, Aromatic feed stock, Vaccum gas oil, Furnace oil, Bitumen, etc.

Milestone

MRPL received A1+ rating (indicating highest safety) for its Short Term Borrowing programme from ICRA.

MRPL was awarded the Commendation Certificate for 'Large Scale Manufacturing Industry - Chemical Industry' under the Rajiv Gandhi National Quality Award 2006.

MRPL won prestigious Jawaharlal Nehru Centenary Award in the year 2006.

It was honoured with Green Tech Gold Safety award for Health and Safety Management Systems in 2005.

Outlook

MRPL is expanding its refining capacity up to 15 MMTPA .It has reached to phase III  of the expansion plan and is anticipated to be completed by October 2011 .The project will cost Rs12412 crore

Mangalore Refinery and Petrochemicals (MRPL), management has conveyed that mechanical completion of the expanded refinery (15 MMTPA) is on track to be achieved in Oct 2011. As on Apr 15, 2011, the project has achieved physical progress of 81% and is scheduled to be commissioned by Jan 2012. Orders to the extent of Rs100.8 bn have been committed and capex on expansion project till date is Rs55.8 bn. The project expenditure so far has been completely met by internal accruals. Going forward, the management has indicated that it will use debt to the minimum extent possible and rely more on internal cash generation. The company is aiming at maximizing intake of domestic crude so as to reduce raw material costs. As per its Strategy paper for import of crude in 2011-12, MRPL has projected a requirement of 13.3 MMT of crude oil, of which it proposes to tie up 11.3 MMT via long term import contracts, 0.2 MMT from spot purchase and 1.8 MMT from ONGC equity crude.

The expansion will witness the refinery complexity rising from 5.5 to 9. The higher complexity gives the refinery a higher secondary conversion capacity which will be helpful for maximizing GRM. The expanded refinery will also consist of a 2.2 MMTPA PFCCU which will mark the entry of the company into the petrochemical space. The company is also setting up Single Point Mooring (SPM) system which will reduce crude transportation costs and would contribute to higher GRM

Taking into account the above mentioned changes to our assumptions, forecast net sales of Rs429,212.7 mn and Rs447,031.7 mn in FY12 and FY13 respectively.  expect EBITDA to jump from Rs22,328.6 mn in FY11 to Rs49,645.4 mn in FY13. and estimate PAT of Rs16,719.6 mn and Rs23,328.8 mn in FY12 and FY13 respectively.  expect EPS to leap from Rs6.7 in FY11 to Rs9.5 in FY12 and Rs13.3 in FY13.