The share price of Mangalore Refinery and Petrochemicals (MRPL) dropped to a low of ₹192.30 on Tuesday, down by nearly 7% from the previous closing price of ₹206.77. At the time of writing, MRPL is trading for ₹202.48, down by 2.07% from the previous close. The share is still in the green territory long term with gains of 4.38% in the past 5 trading days and 5.01% over the past month. Standalone Refiners and Rising Crude Prices In a report, the London-headquartered brokerage firm Elara Capital said that standalone refiners such as MRPL would benefit the most from rising crude prices driven by the current conflict in the Middle East. ”Industry GRM (Gross Refining Margin) would rise ~$5/bbl for every $10/bbl spike in crude – These companies do not have to absorb retail fuel losses,” Elara Capital said , according to Business Today. The brokerage said that MRPL, along with Chennai Petroleum, could see robust expansion in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) albeit this comes with a potential downside. ”Under our stress cases, MRPL (MRPL IN) and Chennai Petroleum (MRL IN) would post very strong EBITDA expansion. However, very high GRMs often attract policy attention,” Elara said. “If spreads are elevated for long, windfall duties or other policy interventions cannot be ruled out. So, while near-term earnings are strong, policy risk would rise with margin expansion.” Absorbing Impact of High Oil Prices Despite the rising oil prices, MRPL and other standalone refiners still face potential losses amid reports that state-owned oil marketing companies (OMCs) in India are considering paying them price lower than the imported rates to limit mounting losses. Citing unnamed sources, The Economic Times reported that OMCs are looking at freezing or fixing a discount on refinery transfer price (RTP) to effectively pay refineries less than the import-parity cost of fuels. This move would prevent refiners from fully passing on high crude costs and force them to absorb part of the impact of rising global oil prices.
