MRPL’s performance in the June 09 quarter failed to amuse investors. Its stock fell nearly 6% from its intra-day high on BSE after the standalone refiner said its net profit plummeted by 50% during the quarter.
MRPL’s June 09 quarter profit of Rs 420 crore appears satisfactory since the Rs 845 crore profit in the year-ago quarter was boosted by excessive inventory gains. However, if we exclude the impact of inventory gains, exchange fluctuation gains and lack of provision for mark-to-market losses, then the company's suffering from weak GRMs becomes evident.
In the June 2008 quarter, the gross refining margin – differential between the cost of a barrel of crude oil and value of petroleum products derived from it – dipped to $7.98 per barrel from $18.36 in the year ago period. The GRM in the June 09 quarter included $4.5 per barrel as inventory gains compared to $11.3 per barrel a year ago. Excluding the inventory gains, it was nearly half of the year ago period.
MRPL’s quarterly numbers were strengthened also by the exchange fluctuation gain of Rs 65 crore. The corresponding quarter of last year had an exchange loss of Rs 127 crore. Similarly, the company did not provide for any mark-to-market losses on unexpired forward contracts during the June 2009 quarter, while writing off Rs 69 crore in the June 2008 quarter. These elements significantly propped up MRPL’s June 09 quarterly performance.
During the quarter, MRPL’s refinery throughput inched up 3% to 2.85 million tonne. The company also boosted its exports by 11% to 0.83 million tonne during the quarter.
Globally the refining industry is facing challenging times ahead and the company will witness pressure on its GRMs. However, considering the low GRMs in September 2008 and December 2008 quarters due to sharp fall in petroleum prices, the company may report better numbers on a y-o-y basis in the coming quarters.
At the close of market, the MRPL scrip was 2.8% down on BSE at Rs 82.30.
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