MRPL Profit Doubles Despite Revenue Dip as Refining Margins Soar

For a pure-play refiner like MRPL, the quarter was a study in contrasts. Soaring global refining margins delivered a windfall, but a fire at a key unit and shifting export volumes painted a more complex picture on the top line. The result was a profit that more than doubled from the previous quarter, even as revenue took a step back.

Net profit for Q2 FY27 jumped to ₹1,901 crore, a 101% increase from Q1 and a 203% surge from a year ago. Revenue, however, declined 14.5% sequentially to ₹35,590 crore, though it remained 37% higher year-on-year. The net profit margin expanded sharply to 5.3%, up from 2.3% last quarter.

The Windfall from Global Chaos

The profit surge was fueled by a historic spike in Singapore Gross Refining Margins (GRM). According to a Financial Express report, the regional benchmark averaged nearly $20.5 per barrel late in the quarter, far above the $8.5 level a year ago. Supply disruptions in the Middle East and Russia tightened product markets, creating a bonanza for refiners not saddled with retail fuel losses.

This translated directly to MRPL's bottom line. ScanX.trade noted the company's EBITDA margin expanded to 9.21% in Q2 from 3.17% in Q1. The company also benefited from a strategic shift to a lower corporate tax regime, with its effective rate dropping to 25.168%.

Why Revenue Took a Hit

The revenue decline had two main drivers. First, export share fell to ₹6,327 crore from ₹10,404 crore a year ago, as reported by The Hindu Businessline. Second, the company booked a provisional exceptional loss of ₹118.76 crore due to a fire at its Coker Hydrotreater unit. This incident also reduced throughput, which dipped to 4.18 million tonnes from 4.43 million tonnes a year earlier.

It's worth noting that the headline profit was flattered by other one-time items. For the first half, ScanX.trade reported a net exceptional income of ₹353 crore, largely from price revisions on earlier supplies, which offset the fire loss.

How Long Can the Good Times Last?

The outlook hinges on the persistence of elevated refining margins. ICRA noted in a September report that Singapore GRMs have stayed above $10 per barrel since the start of the West Asia crisis, supported by continued supply tightness. However, these margins are inherently volatile and tied to geopolitical stability and global oil demand.

Operationally, the fire-damaged unit is insured, with an estimated replacement value of ₹225 crore. The company's new 'BBB-' rating from Fitch strengthens its financial standing. Management's focus on shareholder returns was clear with the declaration of a ₹3 per share interim dividend.