Summary
Mangalore Refinery and Petrochemicals Limited - Q3 FY26 Earnings Call Summary Monday, January 19, 2026 11:00 AM
Event Participants
Executives 3 Avin Gupta (Investor Relations), Devendra Kumar (Director Finance & CFO), Subhas Pai (Head Finance)
Analysts 6 Akash Mehta, Dhaval Popat, Kaushal Kedia, Mayank M (Morgan Stanley), Nilesh Ghuge, Sarthak Tita
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| EBITDA | ₹2,824 crores | +165.4% YoY from ₹1,064 crores; driven by healthy market prices and optimum energy consumption. |
| Net Debt | ₹9,290 crores | Significant reduction from previous levels; Debt/Equity ratio stands at 0.63. |
| MBN (Energy Efficiency) | 67 | Best quarterly efficiency number ever posted by the company. |
| Fuel & Loss (F&L) | 10.06% | One of the best quarterly performances; expected to drop to 9.5% - 10% after grid power project. |
| Throughput | 4.7 MMT | Reported net crude throughput; refinery is operating at ~120% of nameplate capacity. |
| Retail Outlets | 200 count | Achieved 200 outlet milestone; targeting 250 by end of FY26. |
| Product Slate (HSD + ATF) | 50.0% | Bulk of volume production; MS (Petrol) accounts for ~15%. |
| Export Mix | 40.0% | Percentage of refined products diverted to international markets; varies by quarter. |
| Average Retail Sale | 120 KL/month | Throughput per month per retail outlet. |
Geographic & Segment Commentary
- Refining Operations: The refinery is running at 120% utilization (~18 MMTPA run rate excluding shutdowns). Management highlighted operational flexibility through three separate crude trains, though this leads to slightly higher fuel and loss compared to single-train peers.
- Retail Marketing: Strategic shift from a “base refinery” to a full-fledged marketing entity. Currently contributes 1.5-2.0% of revenue, with plans to expand geographic footprint into Maharashtra (Mumbai), Kerala, and Andhra Pradesh/Telangana.
- Domestic & Export Sourcing: Currently 100% compliant with international sanctions; zero Russian crude is being imported. Exports to Europe remain unaffected by the 18th sanctions package as per current assessments.
Company-Specific & Strategic Commentary
- Retail Expansion: Targeting 500 outlets in 3 years and 1,000 outlets in 5 years to capture superior marketing margins over refinery transfer prices.
- Bio-ATF & CORSIA: Investing ₹364 crores in India’s first Bio-ATF plant to comply with international carbon reduction norms (1% blending mandate starting 2027).
- Grid Power Project: Initiative to switch from captive power to grid power, expected to lower F&L to sub-10% levels and improve cost structures in FY27.
- Petrochemical/Specialty Focus: Isobutyl Benzene (IBB) pilot plant for pharmaceutical bases to start next year; long-term vision includes deeper Petchem integration.
- Logistics Infrastructure: Actively bidding for the Bangalore airport pipeline (Devangonti-Devanhalli) and planning new depots in Mumbai and Vizag with ~₹500 crores investment.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Annual Capex | ₹1,500 crores (FY26/27) | Mix of ₹450cr for growth (Retail/Grid) and ₹1,050cr for revamping/maintenance. |
| Retail Outlets | 250 by Mar 2026 | Incremental push to establish 50 outlets in Q4 FY26. |
| Debt Reduction | Directionally lower | Dependent on market conditions; ₹3,260cr in NCDs are locked until 2028. |
| F&L Performance | 9.5% - 10.0% | Targeted improvement for next fiscal year following grid project completion. |
| Dividend | Decision pending Board | Possible for FY26 given high profitability, balanced against capex and debt needs. |
Risks & Constraints
| Risk | Context |
|---|---|
| Margin Volatility | HSD cracks peaked at $21/bbl in Q3 but have moderated to $14-15/bbl; high GRMs are not viewed as sustainable. |
| Regulatory/Tax Risk | Fears of “controlled” pricing or new windfall taxes (like SAED) persist despite deregulation, affecting market valuation. |
| Sanctions Regime | Compliance with evolving international sanctions (especially regarding crude sourcing and European exports) remains a complex operational task. |
| Low Public Float | 88% of equity is held by ONGC/HPCL, leading to limited liquidity and potentially impacting the stock’s valuation multiples. |
Q&A Highlights
Crude Sourcing & Margins
- Question: What is the impact of stopping Russian crude on GRMs? (Mayank M)
- Answer: Russian crude was an “opportunity crude” and represented a marginal improvement. Current healthy cracks in finished products more than offset the loss of Russian barrels. (Devendra Kumar)
Retail Strategy
- Question: What is the cost and logic behind the 5x growth in retail? (Sumeet Rohra)
- Answer: Retail is a “game changer” providing margin stability compared to volatile exports. Costs range from ₹1.5cr (vanilla) to higher for urban outlets, averaging ~₹2cr. (Devendra Kumar)
Freight Rates
- Question: How are high freight rates impacting the USD/barrel cost? (Akash Mehta)
- Answer: Rates spiked in early Q3 due to supply issues but have normalized. They remain higher than Q1 levels but are no longer a “deal-breaker” for imports. (Devendra Kumar)
Debt & Liquidity
- Question: What is the debt repayment schedule? (Sarthak Tita)
- Answer: Non-Convertible Debentures (NCDs) of ₹3,260cr are not due until 2028. ECBs total $500mn (~₹4,500cr), and any repayment depends on Forex volatility. (Devendra Kumar / Avin Gupta)
Key Takeaway
MRPL delivered a strong Q3 FY26 with EBITDA of ₹2,824 crores, fueled by healthy cracks (HSD at $21, MS at $13) and record energy efficiency (MBN 67). The company is undergoing a structural transition from a standalone refiner to an integrated player, targeting 1,000 retail outlets in five years and building India’s first Bio-ATF plant (₹364 crores). While the refinery currently operates at 120% capacity, management is focusing on cost reduction through a grid power project and debt optimization (D/E at 0.63). Despite moderating crack spreads in Q4 and the cessation of Russian crude sourcing, the management remains confident in maintaining profitability. Investors should monitor the progress of retail footprint expansion and the board’s decision on dividends, as the company seeks to address valuation concerns regarding its low public float and regulatory environment.
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