The recent rally is not an isolated event as the stock has been a consistent mover over the past 12 months, giving returns of 82% and outperforming the Nifty50, which has returned nearly 12% during the same time. In 2023, its returns are even better at 87% versus a near 8% rise in the 50-stock index.
MRPL shares have traded with a 1-year beta of 0.8 according to Trendlyne, which suggests that the stock is less vulnerable to market swings.
In the last week of April 2023, MRPL stock gave a falling channel breakout on the weekly scale and since then there has been no looking back by the stock, Sudeep Shah, Deputy Vice President – Technical & Derivatives Research at SBI Securities said, adding that the sharp upside rally has been accompanied by a robust volume action. A trend analysis of the stock points to an uptrend with a sequence of higher tops and higher bottoms on the weekly as well as the daily charts, he added. He sees the current trajectory remaining intact as long as the sequence of higher tops and higher bottoms sustain.
Echoing similar sentiments, analysts Aamar Deo of Angel One and Nilesh Jain of Centrum Broking see the counter-testing levels of Rs 130 with the likelihood of strong resistance at this level. Deo puts support at Rs 90-95 while Jain at Rs 99.Shah of SBI Securities lists 4 triggers for the likely uptick:
1) Even in its sharpest correction phase between June 2022 and March 2023 when the stock fell by 62% after hitting highs of Rs 127.65, the declines were not backed by volumes which remained below average.
2) As the stock is trading at a 67-month high, Daryl Guppy’s multiple moving averages comprising all the 12 short and long-term moving averages and momentum indicators are showing a bullish strength in the stock.
3) The stock is also meeting Mark Minervini’s trend template rules which further gives a clear uptrend picture in the stock.
4) The Average Directional Index (ADX), which shows trend strength, is at a high of 30.88 on the daily chart and at 37.49 on the weekly chart. A figure above 25 is considered a strong trend.
Shah’s recommendation to investors is to stay with the bulls as MRPL may test Rs 130 followed by Rs 145 in the short-term. The stock finds its support at Rs 102-100.
However, Deo of Angel One warns investors who have a very short-term view to be vary as the stock could see profit booking depending on the market mood and on the back of the recent rally.
Moreover, an MFI of 79.2 suggests that the stock is trading in an overbought zone and a reversal cannot be ruled out.
The company reported a consolidated net profit of Rs 1,014.79 crore in the June ended quarter which was down 62% year-on-year and 47%, sequentially. The consolidated revenue stood at Rs 24,832.53 crore, down by 31% YoY against Rs 35,915.4 crore in Q1FY24. Net profit margin stood at 4.7% down from 7.53% in Q4FY23 and 5.41% in Q1FY23.
The company managed to reduce its debt-to-equity ratio to 1.39 in the June quarter versus 1.87 in the year-ago period.
Sunny Agrawal, DVP-Fundamental at SBI Securities remains cautiously optimistic about the stock as he cited uncertainty in the crude oil demand-supply environment coupled with the volatile nature of profitability in the business.
“FY23 was an extraordinary year for MRPL, wherein Sales/PBT has increased by 56%/57% YoY to Rs 1,08,856 cr/Rs 4,239 cr. This was on the back of a spurt in benchmark Singapore GRMs in FY23 to $10.8/bbl from $5.0/bbl in FY22. Due to discounted oil imports from Russia, Indian refiners were able to clock far better GRMs of $20/bbl in FY23. In FY24, Indian refiners are expected to clock GRMs in the $9-$10 per barrel range, implying degrowth YoY,” Agrawal said.
Moreover, promoters’ stake stands at 88.6% with ONGC holding 71.6% and HPCL holding 17.0%, implying OFS overhang on the stock price of MRPL, he added.
Among positives, the company achieved a significant milestone by achieving its highest-ever throughput of 17.14 mmt in FY23, this analyst said. MRPL also expanded its retail presence by adding 31 new outlets during this period, resulting in a total of 63 retail outlets by the close of FY23.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)