PL || research reports by PL Capital - Prabhudas Lilladher on Mangalore Refinery & Petrochemicals (MRPL IN), Can Fin Homes (CANF IN)
the research reports by PL Capital – Prabhudas Lilladher on Mangalore Refinery & Petrochemicals (MRPL IN), Can Fin Homes (CANF IN) for your perusal
Research Reports on:
Mangalore Refinery & Petrochemicals (MRPL IN)- (Click on the Link for Detailed Report)
Can Fin Homes (CANF IN)- (Click on the Link for Detailed Report)
Supreme Industries (SI IN)- (Click on the Link for Detailed Report)
Swarnendu Bhushan
Co Head of Research, Institutional Research
PL Capital Group - Prabhudas Lilladher
Mangalore Refinery & Petrochemicals (MRPL IN)
Rating: HOLD | CMP: Rs144 | TP: Rs137
Q3FY25 Result Update
Strong GRM drives earnings
Quick Pointers:
§ Core GRM at US$6.18/bbl with inventory gain of US$0.03/bbl
§ Board approves acquisition of shares of Mangalore SEZ from IL&FS at a cash consideration of Rs656.6mn
Mangalore Refinery & Petrochemicals (MRPL) reported better-than-estimated results with an EBITDA of Rs10.3bn in Q3FY25 (vs EBITDA loss of Rs4.7bn in Q2, PLe: Rs4.1bn, BBGe: Rs8.1bn). PAT came in at Rs3bn (vs net loss of Rs6.8bn in Q2; PLe Net Loss:Rs1.1bn, BBGe PAT:Rs1.7bn). Reported GRM stood at US$6.2/bbl with an inventory gain of US$0.03/bbl. Throughput came in flat QoQ at 4.6mmt. Average Singapore GRM in Q4FY25-TD has softened to ~US$3/bbl amid decline in product cracks. While near-term weakness persists, we believe GRMs will rebound to US$5-7/bbl in the long term. Accordingly, we build in a GRM of US$4.1/7.5/7.5/bbl for FY25/26/27E. The stock is currently trading at 10.9x/10.9x FY26/27 EPS and 6.1x/5.7x FY26/27E EV/EBITDA. Factoring in the near-term weakness we downgrade our rating from 'Accumulate' to 'Hold' with a TP of Rs137 based on 5x FY27 EV/EBITDA and adding the option value ofRs45 to its chemicals foray.
§ Operating performance improves sequentially: MRPL reported an EBITDA of Rs10.3bn vs EBITDA loss of Rs4.7bn in Q2. The sharp improvement in performance was on account of stronger GRMs. PAT stood at Rs3bn vs net loss of Rs6.8bn in Q2. EBITDA for 9MFY25 came in at Rs11.6bn, down 78.8% YoY. Consequently, net loss for the period stood at Rs3.1bn (vs PAT of Rs24.6bn in 9MFY24).
§ Quarterly GRMs decline sequentially and annually: Reported GRM stood at US$6.2/bbl, up by ~US$5.7/bbl QoQ (PLe: US$4.1/bbl). Core GRM came in at US$6.18/bbl with an inventory gain of US$0.03/bbl. On a YoY basis, GRMs rose by US$1.2/bbl. In Q4FY25-TD, Singapore GRM has weakened amid decline in product cracks, averaging ~US$3/bbl. We expect Singapore GRM to remain range bound between its long term average of US$5-7/bbl. Factoring in this, we build in a GRM of US$4.1/7.5/7.5/bbl for FY25/26/27E.
§ Throughput remains flat sequentially: In Q3FY25, refining throughput came in at 4.6mmt, flat QoQ. Capacity utilization came in at 108%. On a YoY basis, throughput grew 4%. Merey-16 crude from Venezuela (API-15.69) was processed for the first time in November 2024. Highest ever atf and benzene production was reported at 763.1tmt and 60.6tmt, respectively during the quarter. Going ahead, we build in a throughput of 17.8/17/17mmt for FY 25/26/27E.
§ MRPL to increase stake in MSEZ to 27.92%: The Board has approved the acquisition of 1,34,80,000 equity shares of Mangalore SEZ Limited (MSEZ) from IL&FS at a cash consideration of Rs656.6mn. Indicative time period for completion of acquisition is one year. Post this acquisition, MRPL's stake in the company will rise from 0.96% to 27.92%.
(Click on the Link for Detailed Report)
Gaurav Jani
Research Analyst
PL Capital – Prabhudas Lilladher
Can Fin Homes (CANF IN)
Rating: BUY | CMP: Rs708 | TP: Rs860
Q3FY25 Result Update
Loan growth continues to remain weak
Quick Pointers:
§ Soft quarter owing to lower loan growth and higher provisions.
§ Lower loan growth in FY25/26/27E to drive PAT cut of 3%/7% in FY26/27E.
CANF saw a weak quarter since loan growth was lower while asset quality saw a blip. Credit growth was 9.1% YoY (PLe 10.9%) as disbursals were affected and dipped by 21% QoQ as state specific issues in Karnataka and Telangana marred credit flow. These 2 states contribute 48% to overall disbursals. The company is targeting credit growth of 15% YoY in FY26E which may be challenging given (1) demand recovery in abovementioned states could be protracted and (2) LOS/LMS implementation may impact disbursals. Hence, we cut loan growth for FY25/26/27E by 4%/3%/2% to 9%/11%/12% YoY. There is upside risk to loan growth due to renewal of CLSS. Asset quality has been worsening since Q4FY24 since the overdue portfolio has been increasing owing to new RBI circular disallowing adjustment of customer advances against EMIs. While stock is valued at 1.6/1.4x on FY26/27E ABV, underperformance on growth and asset quality are key concerns. We cut multiple to 1.8x from 2.1x on Sep'26 ABV and trim TP to Rs860 from Rs1,000 but retain 'BUY' due to favorable valuations.
§ Weak quarter with miss on loan growth and asset quality: NII came in at Rs3.45bn (PLe Rs3.48bn); loan growth was a miss though NIM was largely in-line. NIM (calc.) was 3.87% (PLe3.88%) while yield on assets and cost of funds were higher than expected. Reported yield on advances improved QoQ while cost of funds reduced slightly QoQ. Reported NIM was flat QoQ at 3.64%. Loan growth was a miss at 9.1% YoY (PLe 10.9%) as disbursals were weak at Rs18.8bn (PLe Rs25bn); repayments at Rs13.15bn were in-line. Other income was lower at Rs58mn. Opex was better at Rs593mn (PLe Rs665mn) due to lesser staff cost and fees & commission. On asset quality, gross stage-3 saw a blip QoQ from 0.88% to 0.92%; PCR was 45.2% (46.3% in Q2FY25). Provisions were a miss at Rs221mn (PLe Rs150mn). PAT was 0.8% below PLe at Rs2.1bn led by lower NII and higher provisions.
§ Karnataka and Telangana impacting overall growth: Disbursals fell by 21% QoQ driven by (1) E-Khata issue in Karnataka due to which registrations stopped (2) land demolition in Telangana due to change in govt. impacting demand. Hence disbursals were hit by Rs4.3bn (Rs3.5-4bn from Karnataka). Usually, Karnataka/Telangana contribute 34%/15% to disbursals. The company does not expect the situation in Karnataka to prolong and the state govt. has already deployed staff to release E-Khata. CANF is targeting disbursals of Rs120bn in FY26 which would translate to AuM growth of 15% YoY. Salaried vs self-employed mix was 71:29 compared with 73:27 in Q4FY23; the company is comfortable with a mix of 65:35. We cut loan growth for FY25/26/27E by 4%/3%/2% as (1) ~50% of credit flow is exposed to state related bottlenecks (2) LOS/LMS implementation in FY26 could hamper credit accretion.
§ Asset quality has been a drag due to increasing SMA levels: SMA-0 balance has consistently risen from Rs1.38bn in Q4FY24 to Rs2.59bn. Earlier, companies used to adjust customer advances with EMI at the end of the month however the new RBI circular disallows the same causing SMA balances to increase. This has led to elevated provisioning levels. Management expects stage-3 to fall to 0.8% from 0.9% due to higher recoveries in Q4. Hence credit costs for Q4FY25 could be negligible, suggesting provisions of 15bps for FY25.
(Click on the Link for Detailed Report)
Praveen Sahay
Research Analyst
PL Capital – Prabhudas Lilladher
Supreme Industries (SI IN)
Rating: BUY | CMP: Rs4,022 | TP: Rs5,040
Q3FY25 Result Update
Volume guidance revised downward
We have downward revised our earnings estimates for FY25/FY26/FY27E by 12.2%/8.0%/6.5% and revised TP to Rs5,040 (Rs5,721 earlier), based on 42x FY27E earnings. Supreme Industries' (SI) Q3FY25 volume growth was 3.0% below with our estimates, due to lower volume in the plastic pipe segment (up 3.7% YoY against our est. of 8%) because of low demand in agri and infra segments, with extended rainfall in south India, and delay in ADD on PVC resin resulted de-stocking in the channels. EBITDA margin contracted by 320bps YoY with decrease in EBIT/kg to Rs10.9 (down 37.6% YoY) in the pipe segment mainly due to inventory losses in the pipe segment. SI has revised its guidance for overall volume growth to ~12% with an EBITDA margin of 13.5-14% for FY25, and volume growth for pipe segment to 15-16%. SI has planned brownfield expansion at existing manufacturing sites and establishing new plants near Patna (Bihar), Malanpur (MP) and Kathua (J&K).
We estimate FY24-27E revenue/EBITDA/PAT CAGR of 12.8%/12.1%/12.4%, with volume CAGR of 12.7% and EBITDA margin contraction of ~30bps. Maintain 'BUY'.
Revenues increase by 2.5%, Adj. PAT decline by 27.0%: Sales increase by 2.5% YoY to Rs25.1bn (PLe:Rs26.0bn) with vol. increases by 3.0% YoY to 163kMT and realization declines by 0.5% YoY. Plastic Pipe segment revenue up by 1.3% YoY to Rs16.6bn, packaging revenue up by 12.5% YoY to Rs4.0bn, industrial revenue remained flat at Rs3.3bn, consumer segment was down by 5.3% YoY to Rs1.1bn. EBITDA declined by 18.5% YoY to Rs3.1bn (PLe: Rs3.6bn). EBITDA margin was at 12.3% (PLe:14.0%) and EBITDA per Kg reached to Rs13.0/kg. In Packaging/ Plastic Pipes/Consumer/industrial, EBIT margins contracted by ~210/470/150/75bps YoY to 11.1%/8.3%/15.9%/8.2%.PAT stood at Rs 1.9bn (-27.0%YoY; PLe Rs2.4bn).). The overall turnover of value added products remains at Rs.9.61bn in Q3FY25 as compared to Rs8.53bn in Q3FY24.
Con call highlights: 1) SI revised the guidance of 16-18% volume growth in plastic pipe system to 15-16% for FY25 mainly due to low spending on infrastructure by governments and extended winter rainfall in south India and some eastern states.
2) Company is expected to grow at 12% with a margin of 13.5-14.0% for FY25.
3) In the Piping segment capacity is expected to reach 900,000 MTPA by FY25 currently it is 820,000MTPA. Additionally, SI is planning three greenfield expansions in Jammu, Bihar, and Madhya Pradesh.
4) Plastic Piping industry across polymers grew by 1% in value terms whereas SI grew by 7.5% and CPVC industry grew by 9% in volume terms whereas SI has grown more than 20% in 9MFY25.
5) In the beginning of FY25 SI had 421 SKUs in bath fittings and sanitaryware segment which increased to more 629 SKUs, with plans for further expansion.
6) The company will launch ready-made windows with a 5,000-tonne capacity at its Kanpur plant, targeting UP, Uttarakhand, and NCR by the first half of FY25-26.
7) Cross Laminated Film segment volume is expected to grow by 20%.
8) The Protective Packaging Division is expanding its capacity with a new greenfield site near a western port to support both export and domestic demand. The project is expected to conclude by Q1 FY26.
9) The furniture segment company introduced 12 new models in 9MFY25.
10) The company received an LOI for 10 kg LPG cylinders from IOCL, with supplies expected to be completed by Feb25. Additionally, the company is working on developing a standard 14.2 kg cylinder design for all major oil marketing companies (IOCL, BPCL, and HPCL), which is expected to generate significant business opportunities in FY26 and commercialization of CNG cylinders is set to drive growth from Q4FY25.
11) The company has three OPVC lines with a capacity of 9,000 MTPA, focusing on smaller diameter pipes within the range of 100-400mm. Additionally, seven new lines are planned, with a total capacity of 30,000 MTPA by FY28.
12) Company reported an inventory loss of Rs 1000mn in 9MFY25.
(Click on the Link for Detailed Report)
