MRPL and Chennai Petroleum surge up to 19% on strong business outlook

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Shares of Mangalore Refinery & Petrochemicals (MRPL) and Chennai Petroleum Corporation (CPCL) soared as much as 19% and hit their respective 52-week highs amid heavy volumes on BSE during Tuesday’s trading in a otherwise weak market.

The rise in Singapore’s gross refining margin (GRM) to a record high of $25.2 a barrel bodes well for Indian refiners processing raw crude into refined products.

Among individual stocks, MRPL jumped 19% to Rs 107.35, while CPCL soared 17% to Rs 374.80. By comparison, the S&P BSE Sensex was down 0.93% at 55,159 at 10:07 a.m. In the past three months, CPCL has climbed 234% and MRPL has jumped 145%, against a 4% rise in the benchmark, thanks to strong profits.

Trading volumes at these counters have almost tripled compared to the average trading volumes of the last 10 trading days. A total of 24 million shares changed hands on the MRPL counter and 8.02 million shares on CPCL on the NSE and ESB. The exchanges also revised the circuit limit for these stocks from 5% to 20% effective today.

CPCL operates in the downstream petroleum sector. It produces a range of value-added petroleum products. MRPL is in the business of refining crude oil and is a subsidiary of Oil and Natural Gas Corporation Limited (ONGC), which owns 71.63% of the shares.

During the January to March quarter (Q4FY22), CPCL reported a quadrupling of its consolidated net profit to Rs 1,002 crore from Rs 242 crore in Q4FY21. Operating revenue jumped 43% year-on-year (YoY) to Rs 20,997 crore from Rs 14,705 crore in the prior year quarter.

For Q4FY22, MRPL reported standalone net profit of Rs 3,008 crore compared to profit of Rs 268 crore in Q4FY21, supported by higher crude production and better gross refining margins. MRPL has taken several initiatives to improve revenue from marketing margins in domestic, export and B2B (business to business) deals. Taking this into account, gross operating income increased by 36% year-on-year to reach Rs 28,228 crore from Rs 20,793 crore in Q4FY21.

Transportation fuels commodity cracks are currently trading at multi-quarter highs. GRMs should benefit from a favorable global refining scenario and MRPL should record strong profits in the short term, according to analysts at ICICI Securities.

Meanwhile, Oil and Natural Gas Corporation (ONGC) gained 6% to Rs 162.85 on BSE. Indian oil hit a new 52-week high at 288.95 rupees, up 4% in intraday trading today, up 15% in the past two trading days.

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