Are MRPL latest results good or bad?

The latest financial results for Mangalore Refinery and Petrochemicals Limited (MRPL) indicate a notable operational recovery in the second quarter of FY26. The company reported a net profit of ₹623.67 crores, marking a significant turnaround from a loss in the previous quarter. This improvement was supported by a substantial increase in revenue, which rose to ₹22,648.57 crores, reflecting a quarter-on-quarter growth of 30.49%.
The operating profit margin also saw a considerable enhancement, expanding to 6.57% from just 1.03% in the prior quarter, indicative of improved refining economics and better product realizations. Furthermore, the profit before tax reached ₹963.35 crores, a sharp recovery from the loss of ₹401.59 crores in the preceding quarter.

Despite these positive quarterly trends, the year-on-year comparison reveals challenges, as revenues declined by 9.29% from ₹24,967.87 crores in Q2 FY25, highlighting the ongoing difficulties within the refining sector. Additionally, while the company's return on equity (ROE) remains low at 0.43%, it is significantly below its five-year average of 19.18%, suggesting that the current profitability levels are not adequately generating returns on capital employed.

MRPL's balance sheet reflects ongoing deleveraging efforts, with long-term debt reduced to ₹8,228.97 crores. However, the debt-to-equity ratio remains elevated at 2.46, indicating a high level of financial leverage. The company also experienced a notable decline in cash flow from operations for FY25, which fell to ₹1,877.00 crores from ₹7,050.00 crores in FY24, raising concerns about sustainability.

Overall, while MRPL's recent results demonstrate a significant operational recovery and an adjustment in its evaluation, the company continues to face challenges related to margin volatility and overall financial performance in a competitive refining landscape. Investors should monitor the sustainability of these improvements in the context of broader market conditions.