- MRPL's Q3FY26 EBITDA surged to Rs27.8bn, 31% above consensus.
- Profit after tax jumped 127% YoY to Rs14.5bn, outpacing expectations.
- Throughput rose 6.1% QoQ, reaching 4.7 mmt, signaling capacity leverage.
- EV/EBITDA trades at 6.5x for FY27 – a deep‑value entry point.
- Marketing expansion to 1,000 retail outlets could unlock incremental margin.
- Chemical foray valuation cut in half – commercial rollout still years away.
You overlooked MRPL's earnings boom – now your portfolio could be missing the next big upside.
Quarter 3 of FY26 delivered an EBITDA of Rs27.8 billion, dwarfing the consensus of Rs21.1 billion and even the internal forecast of Rs18.5 billion. The profit‑after‑tax (PAT) figure rose to Rs14.5 billion, well above the market’s Rs10.5 billion expectation. These numbers stem from higher fuel crack spreads and a 6.1% quarter‑on‑quarter rise in crude throughput to 4.7 million metric tonnes. While the crack spreads have softened back to Q2 levels, the momentum in utilization and the company’s aggressive retail‑outlet expansion plan provide a compelling upside narrative.
Why MRPL's EBITDA Surge Beats Consensus and What It Means
EBITDA—earnings before interest, taxes, depreciation, and amortisation—is a proxy for operating cash flow. A 31% beat suggests the refinery is extracting more profit from each barrel processed. The primary driver was a stronger fuel crack spread, the difference between the price of refined products and the cost of crude. Even though spreads have retreated to Q2 levels, the sheer increase in throughput amplified absolute earnings. The market now values MRPL at 6.5× FY27 EV/EBITDA, a discount to peers that typically trade above 8×, indicating a valuation gap that savvy investors can exploit.
Sector Momentum: Indian Refining Landscape After MRPL's Q3 Jump
India’s refining sector is entering a growth phase powered by rising domestic demand and tighter import quotas. The government’s push for fuel security has led to higher utilisation across the board. MRPL’s ability to lift throughput while maintaining margin resilience positions it ahead of the sector curve. Moreover, the planned expansion to 1,000 retail outlets aligns with the broader trend of integrated downstream players moving into the consumer‑facing segment, a move that can lift margin on the product‑sale side.
Competitor Lens: Tata Refining and Adani Total Gas Reaction
Tata Refining, which operates the second‑largest refinery in India, reported a modest 4% capacity utilisation increase in the same quarter, but its EBITDA growth lagged at 12% YoY, reflecting tighter crack spreads. Adani Total Gas, while primarily a gas distribution firm, is eyeing downstream expansion and has hinted at strategic partnerships with refineries. Both peers are watching MRPL’s retail‑outlet rollout; a successful rollout could force them to accelerate similar initiatives, potentially compressing MRPL’s first‑mover advantage.
Historical Echoes: Past Refinery Upswings and Share Performance
Looking back at FY22, a comparable EBITDA surge at Hindustan Petroleum led to a 45% rally in its stock over the next six months, fueled by investor optimism on margin expansion. Conversely, when Indian Oil’s earnings beat in FY20 but were followed by a sharp crack‑spread contraction, the share price corrected 20% within three months. The key differentiator was the sustainability of throughput growth and the company’s diversification strategy. MRPL’s forward‑looking retail plan may provide that durability.
Technical Terms Decoded: EBITDA, EV/EBITDA, Crack Spread
EBITDA measures operating profitability before non‑operating costs and depreciation, useful for comparing capital‑intensive firms. EV/EBITDA (enterprise value divided by EBITDA) gauges valuation relative to cash‑generating ability; lower multiples imply cheaper relative pricing. Crack spread is the per‑barrel margin a refinery earns after converting crude into petroleum products; it fluctuates with global oil prices and product demand.
Investor Playbook: Accumulate vs. Caution – Bull and Bear Cases
Bull Case: The combination of robust throughput, a still‑elevated EV/EBITDA discount, and a 1,000‑outlet retail vision could lift earnings multiple to 7.5× by FY28. A sustained crack‑spread recovery would further amplify cash flow, supporting dividend growth and share‑price appreciation.
Bear Case: If global oil markets tighten and crack spreads regress below Q2 levels, MRPL’s margin cushion may erode. Additionally, the chemical venture’s delayed commercialization reduces near‑term upside, and any execution hiccup in the retail rollout could dilute the expected margin accretion.
Given the current valuation and the upside catalysts, a disciplined “accumulate” stance is warranted, with a target price of Rs162, reflecting a 6.0× FY27 EV/EBITDA multiple. Investors should monitor crack‑spread trends, retail‑outlet roll‑out milestones, and peer reactions to fine‑tune positioning.