Prabhudas Lilladher has raised its price target for Mangalore Refinery and Petrochemicals Ltd (MRPL) to Rs 180 following strong second-quarter results. The company reported a sharp rise in profits due to favorable crude oil procurement costs. However, the brokerage maintains a 'Hold' rating, as it expects refining margins to normalize as global geopolitical tensions ease in the coming years.
Mangalore Refinery and Petrochemicals Limited (MRPL) delivered a strong financial performance in the second quarter of the 2027 fiscal year. The company posted an EBITDA—a key measure of operating profit—of Rs 32.8 billion. This result was significantly higher than the Rs 23.3 billion analysts had expected and also beat the broader market consensus of Rs 30.2 billion. This is a notable improvement compared to the Rs 13.2 billion profit reported in the previous quarter.
Refining Margins and Operational Impact
The improvement in profit was largely driven by a healthy rise in Gross Refining Margins, which represent the profit earned from converting crude oil into finished fuel products. These margins climbed to USD 14.8 per barrel, up from USD 8.3 per barrel in the first quarter of the fiscal year. This expansion was helped by lower costs to purchase crude oil. During the same period, the actual amount of crude oil processed by the refinery fell by 5.6 percent. The company noted that this drop was due to scheduled maintenance shutdowns, which are necessary regular operations that temporarily reduce the amount of oil processed.
Outlook and Valuation Risks
Despite the strong quarter, brokerage firm Prabhudas Lilladher has maintained a 'Hold' rating on the stock while raising its price target to Rs 180. The firm’s analysts pointed out that the current high margins are partly linked to volatile geopolitical conditions. As these conditions stabilize, they expect refining margins to move back toward lower, more typical levels of around USD 7.4 to 7.5 per barrel for the 2028 and 2029 fiscal years. This cycle of rising and falling margins is a common characteristic of the oil refining sector.
The analysts also assigned an estimated value of Rs 23 per share to the company’s ongoing chemicals project. While this is seen as a potential long-term benefit, the project remains in the early stages and is likely several years away from becoming a major contributor to commercial revenue. The revised price target reflects the company’s performance against its projected enterprise value and operating profit. Investors tracking MRPL may look for updates on how refining margins hold up after the maintenance period ends and how the company manages the progress of its long-term chemicals expansion.