Mangalore Refinery and Petrochemicals delivers record volumes but profit crashes over 98%: What investors must know now

Why Did Mangalore Refinery and Petrochemicals Limited’s Profit Fall in FY25 Despite Record Throughput?

Mangalore Refinery and Petrochemicals Limited (MRPL), a Schedule “A” Mini Ratna Category I public sector enterprise under Oil and Natural Gas Corporation Limited, announced its audited financial results for the fourth quarter and full year ended March 31, 2025. While the company achieved operational highs during FY25, a dramatic contraction in profitability exposed the vulnerabilities faced by India‘s downstream energy sector amid global refining margin headwinds.

The financial results were approved during the 269th Board Meeting held on April 26, 2025. MRPL’s performance reflects broader industry pressures that intensified through FY25, including softer petroleum product spreads, volatile crude benchmarks, and rising competition from newer global refining capacities.

What Were MRPL’s Operational Milestones During FY25?

Mangalore Refinery and Petrochemicals Limited recorded its highest ever crude throughput of 18.044 million metric tonnes (MMT) during FY25, exceeding the previous best of 17.116 MMT achieved in FY23. This milestone underscores MRPL’s enhanced operational efficiencies post-Phase-3 expansion, combined with robust plant reliability and debottlenecking efforts.

Distillate yields improved significantly to 81.93%, compared to 78.77% in the previous financial year, highlighting optimised processing configurations. Aviation Turbine Fuel (ATF) production set a new benchmark at 2.72 MMT, reflecting India’s recovering aviation demand.

The Aromatic Complex delivered an output of 1.20 MMT of Reformate and 95 RON Motor Spirit, up from 0.83 MMT, while Benzene production increased from 0.13 MMT to 0.21 MMT, reflecting value addition initiatives. Specific energy consumption fell to a record low MBN of 70.71, demonstrating MRPL’s focus on operational cost reduction and environmental sustainability.

In downstream expansion, MRPL commissioned the new Bitumen train and PFCC Wet Gas Scrubber, strengthening product diversification and regulatory compliance. Additionally, the launch of the Devangonthi Marketing Terminal and 66 new retail outlets expanded MRPL’s marketing footprint, with the retail network now reaching 167 outlets across India.

Why Did MRPL’s Financial Performance Decline Despite Operational Gains?

Despite volume growth, MRPL’s financial results showed sharp deterioration. For Q4 FY25, revenue from operations stood at ₹27,601 crore, down 5.45% year-on-year. Profit Before Tax (PBT) dropped to ₹584 crore from ₹1,766 crore a year earlier, while Profit After Tax (PAT) fell steeply to ₹363 crore from ₹1,137 crore. Gross refining margins (GRM) collapsed to US$6.23 per barrel, compared to US$11.35 per barrel in Q4 FY24.

The full-year revenue rose modestly to ₹1,09,277 crore, up from ₹1,05,223 crore. However, full-year PBT plunged to ₹113 crore from ₹5,521 crore, and PAT collapsed to ₹51 crore from ₹3,596 crore. FY25 GRM averaged US$4.45 per barrel versus US$10.36 in FY24, reflecting a broader structural weakening in refining profitability.

Global refining markets in FY25 faced oversupply pressures, particularly in middle distillates such as diesel and jet fuel, coupled with aggressive capacity additions in China and the Middle East. These supply-demand mismatches compressed product cracks, reducing realisable margins for refineries like MRPL that have significant export exposure.

How Does MRPL’s FY25 Performance Compare With Sector Peers?

Compared to peers such as Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), MRPL’s GRM decline was steeper. BPCL and HPCL, with integrated marketing and retail businesses, partly cushioned margin shocks, while MRPL’s higher export dependency amplified the profitability hit.

Reliance Industries’ Jamnagar refining complex, equipped with a higher complexity index and a flexible feedstock strategy, managed to retain relatively higher GRMs, illustrating the competitive gap facing MRPL in a rapidly evolving refining landscape.

In terms of marketing growth, MRPL’s retail outlet expansion was encouraging but still lags behind integrated players who leverage large networks to mitigate refining volatility through marketing margins.

How Did MRPL’s Stock React to the FY25 Results?

MRPL’s stock performance reflected investor concerns post-results. On April 25, 2025, MRPL shares closed at ₹137.11, marking a 2.9% decline. Over the past year, MRPL’s stock price has eroded by 44.87%, underperforming both the BSE Oil & Gas Index and the broader Nifty 500 Index.

The company’s trailing twelve-month price-to-earnings (P/E) ratio expanded to 31.62, compared to a sector average of around 9.39, highlighting market apprehensions about sustainability of earnings at current valuations. MRPL’s 52-week price range between ₹259.90 and ₹98.92 points to elevated volatility amid sector-specific headwinds and global crude uncertainty.

What Is Institutional Investor Sentiment Towards Mangalore Refinery and Petrochemicals?

Institutional flows also reveal a cautious outlook. As of March 31, 2025, promoter shareholding remained stable at 88.58%. However, foreign institutional investors (FIIs) slightly reduced their stake from 1.36% to 1.31%, while domestic institutional investors (DIIs) trimmed holdings from 1.66% to 1.32%. Mutual fund positions dropped from 1.40% to 1.10%.

April 2025 witnessed mixed flows: although FIIs were net buyers on specific days (notably ₹2,952 crore on April 25 across broader markets), cumulative monthly flows showed a net FII outflow of ₹2,175 crore. Meanwhile, DIIs remained net buyers, recording inflows of ₹22,249 crore during April, indicating selective bullishness in domestic institutions despite sectoral caution.

This divergence suggests that while retail investors and DIIs may be positioning for longer-term plays in the oil and gas sector, FIIs are maintaining a defensive stance amid global economic uncertainties.

What Are Analysts Recommending for MRPL Stock?

Analyst sentiment remains cautious. Among three analysts actively covering MRPL, one issued a ‘Sell’ recommendation, and two placed a ‘Strong Sell’ call. The consensus 12-month target price stands at ₹124, implying modest downside from current levels, with forecast ranges between ₹109 and ₹143.

Brokerages indicated that MRPL’s weaker earnings profile, combined with limited near-term GRM recovery signals, justifies conservative valuations. They also cited intensifying competition, regulatory risks linked to emissions standards, and the looming energy transition as potential challenges for MRPL’s medium-term earnings trajectory.

Investment advisories suggest that existing long-term investors may consider holding, provided they have a higher risk appetite, while new investors should await clearer signs of margin recovery before considering fresh exposure.

What Does the Future Hold for Mangalore Refinery and Petrochemicals and India’s Refining Industry?

Looking ahead, MRPL’s strategic focus will likely intensify on building marketing resilience, improving energy efficiency, and enhancing petrochemical integration. The Devangonthi terminal and retail expansions are expected to strengthen domestic sales, thereby reducing export-dependency.

However, the global refining outlook remains challenging. Analysts expect global refining capacity additions to outpace demand growth through 2025–2027, maintaining downward pressure on GRMs. Simultaneously, India’s domestic demand growth remains robust, offering some insulation to domestic refiners if they can pivot effectively.

Environmental regulations and the global shift towards alternative energy sources are reshaping investment priorities. MRPL’s ability to adapt to these evolving dynamics, manage capital prudently, and explore cleaner fuel alternatives will determine its long-term sustainability and shareholder value creation.

MRPL’s FY25 financial report thus encapsulates a broader narrative facing Indian refiners: operational excellence alone is no longer sufficient. Strategic adaptability, margin diversification, and sustainability leadership will increasingly define competitive advantage in the coming decade.