Shares of Mangalore Refinery and Petrochemicals Ltd (MRPL) rose as much as 7%, reaching an intraday high of ₹149.40 during Wednesday's trading session. The sharp rebound followed a three-day losing streak that had pressured the stock in recent sessions.

Strategic Shift in Crude Oil Sourcing

The recent decline was triggered by comments from company executives stating that MRPL is not importing Russian crude due to Western sanctions and is exploring purchases of Venezuelan oil. According to Devendra Kumar, MRPL's head of finance, the company is considering Venezuelan crude purchases as it halts Russian oil imports to remain compliant with international sanctions.

"We are in strict compliance with all sanctions in place, and currently no Russian crude is being imported," Kumar stated during an analyst call. This strategic shift represents the company's proactive approach to diversifying its crude sourcing amid geopolitical challenges.

Operational Overview

MRPL operates a significant refining capacity and maintains a strong export presence in the fuel market:

Strong Q3 FY26 Financial Performance

Prior to the recent three-day dip, the stock had surged nearly 9% following strong Q3 FY26 results. The company delivered impressive financial performance with significant improvements across key metrics:

The substantial improvement in margins boosted investor confidence and contributed to the stock's recent positive momentum.

Valuation and Technical Analysis

MRPL's shares are currently trading at relatively attractive valuations with a price-to-earnings ratio of 11.22 and a price-to-book ratio of 1.88. On the technical front, the 14-day Relative Strength Index stands at 41.4, suggesting that the stock is neither overbought nor oversold.

In terms of moving averages, MRPL is trading below four of its eight short-term simple moving averages, indicating some near-term weakness. However, it continues to trade above its 150-day and 200-day long-term simple moving averages, signaling a healthy long-term trend.

Market Outlook

MRPL's stock rebound is supported by strong quarterly earnings and its proactive efforts to diversify crude sourcing. These factors appear to have restored investor confidence following earlier concerns over geopolitical supply disruptions. The company's commitment to sanctions compliance while exploring alternative crude sources demonstrates strategic flexibility in navigating complex international trade environments.

Mangalore Refinery and Petrochemicals (MRPL) has delivered exceptional financial performance in Q3FY26, with EBITDA reaching ₹27.8bn, representing a substantial improvement from ₹14.9bn recorded in Q2FY26. The results significantly surpassed analyst expectations, with Prabhudas Lilladher's estimate of ₹18.5bn and consensus estimates of ₹21.1bn. The strong performance was primarily driven by stronger fuel cracks and higher utilization rates across the company's operations.

Outstanding Financial Performance

The company's profitability metrics showed remarkable improvement across key parameters during the quarter:

The profit after tax (PAT) performance was particularly noteworthy, with the company achieving ₹14.5bn compared to Prabhudas Lilladher's estimate of ₹8.1bn and consensus estimates of ₹10.5bn. This represents a significant improvement from ₹6.4bn in Q2FY26 and ₹3.0bn in Q3FY25.

Operational Excellence and Throughput Growth

MRPL's operational efficiency continued to improve, with throughput reaching 4.7mmt during the quarter, exceeding Prabhudas Lilladher's estimate of 4.4mmt. The company achieved quarter-on-quarter growth of 6.1% and year-on-year growth of 2.2% in throughput volumes. This operational improvement contributed significantly to the strong financial performance, demonstrating the company's ability to maximize capacity utilization.

Strategic Expansion Plans

The company has outlined ambitious expansion plans for its marketing presence, targeting significant growth in retail operations. MRPL plans to expand its retail outlet network to 1,000 outlets over the next five years, representing a substantial increase in its downstream presence. This strategic initiative aims to strengthen the company's market position and enhance its direct customer reach.

Market Conditions and Future Outlook

While MRPL benefited from favorable market conditions during Q3FY26, crack spreads have since moderated to Q2FY26 levels. Prabhudas Lilladher has incorporated gross refining margins (GRM) of USD 7.6 per barrel for FY27E and USD 7.5 per barrel for FY28E in their projections, reflecting expectations of normalized market conditions.

Analyst Recommendation and Valuation

Prabhudas Lilladher has maintained its 'ACCUMULATE' rating on MRPL with a revised target price of ₹162, down from the previous target of ₹168. The valuation is based on 6.0x December FY27 EV/EBITDA multiple. Currently, the stock trades at attractive valuations of 6.5x FY27E and 5.9x FY28E EV/EBITDA multiples.

The brokerage has adjusted its assessment of the company's chemicals business, lowering the option value from ₹45 to ₹22, as the commercialization plans remain several years away. Despite this adjustment, the strong refining performance and strategic expansion plans support the positive investment thesis for MRPL.