MRPL’s Breakout Pattern: Rising Refinery Stock with Low PE

By -

MRPL: A Refinery Stock with a Bullish Breakout


MRPL, or Mangalore Refinery and Petrochemicals Limited, is one of the leading refineries in India. It is a subsidiary of ONGC, the largest oil and gas exploration and production company in the country. MRPL has a capacity of 15 million metric tonnes per annum (MMTPA) and produces a variety of products, such as petrol, diesel, kerosene, LPG, naphtha, propylene, bitumen and sulphur.

MRPL has been attracting a lot of attention from the investors lately. It gave a handsome pole and flag breakout above levels of Rs 81 and ended the day at Rs 88.8, up by 12%, on July 4, 2023. This was accompanied by high volumes, indicating strong buying interest.

What is a Pole and Flag Breakout?

A pole and flag breakout is a bullish continuation pattern that signals a potential uptrend in the price of a stock. It consists of two parts:

A pole: This is a sharp and vertical rise in the price, representing a strong rally.
A flag: This is a consolidation phase, where the price moves sideways or slightly downwards, forming a rectangular or triangular shape. This represents a pause or a correction before the next move.
The breakout occurs when the price breaks above the upper boundary of the flag with high volume. This indicates that the buyers have regained control and are ready to push the price higher.

Here is an example of a pole and flag breakout in MRPL’s daily chart.

What are the Implications of this Breakout?

A pole and flag breakout is a positive sign for the stock, as it indicates that the uptrend is likely to continue. The target for the pattern breakout can be calculated by adding the height of the pole to the breakout point. In this case, the height of the pole is Rs 81 - Rs 49.25 = Rs 31.75. The breakout point is Rs 81. Therefore, the target is Rs 81 + Rs 31.75 = Rs 112.75.

This target may be achieved in the short to medium term, depending on the market conditions and other factors. However, it is not a guarantee, and investors should also consider other technical indicators and fundamental analysis before making any investment decisions.

Why is MRPL Performing Well?

MRPL’s stock performance can be attributed to several factors, such as:

  • Strong demand recovery: The refinery sector has been benefiting from the gradual reopening of the economy and the easing of lockdown restrictions amid the COVID-19 pandemic. The demand for petroleum products has been picking up, especially for diesel and petrol, which are used for transportation and mobility.
  • Improved margins: MRPL has been able to improve its operating margins by optimizing its product mix, reducing its costs, and increasing its efficiency. According to its latest quarterly results1, its operating margin was 7.08% for Q4 FY23, compared to -0.13% for Q4 FY22.
  • Attractive valuation: MRPL’s stock is trading at a low valuation compared to its peers and its historical averages. As of July 4, 2023, its price-to-earnings (PE) ratio was 5.092, while its price-to-book (PB) ratio was 1.382. These ratios are lower than those of other refinery stocks like Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL).

Conclusion

MRPL is a refinery stock with a bullish breakout that may offer good returns in the short to medium term. The stock has shown a strong technical pattern with high volume on July 4, 2023. The stock may have more upside potential as it benefits from the demand recovery, improved margins, and attractive valuation. However, investors should also be aware of the risks involved in investing in this sector, such as volatility


Disclaimer: This blog post is for informational purposes only and does not constitute any investment advice. The author is not a financial expert and does not guarantee the accuracy, completeness, or reliability of the information provided. The views and opinions expressed in this blog post are those of the author and do not necessarily reflect those of any organization or entity. Investors should do their own research and consult a professional before making any investment decisions. The author is not responsible for any losses or damages arising from the use of the information in this blog post.

Keywords: MRPL, Refinery, Stock, Breakout, Pole and Flag, Demand, Margins, Valuation

Comments

Post a Comment

Popular posts from this blog

Deccan Gold Mines Up 150% in a Year, Makes Major Lithium Move in Mozambique

By -
Image
The country's only listed gold exploration and mining company Deccan Gold Mines Limited (DGML) acquired majority stake in 5 lithium blocks in Mozambique, Africa  Deccan Gold Mines Limited (DGML), India's sole listed gold exploration and mining company, has recently made a significant move that has caught the attention of investors worldwide. The company has acquired a majority stake in five lithium blocks in Mozambique, Africa, positioning itself within the globally recognized Alto Ligonha pegmatite belt, known for its abundant reserves of lithium-cesium-tantalum (LCT) pegmatites. {jistoc} $title={Table of Contents} A Strategic Acquisition This acquisition is crucial for the mining of lithium, tantalum, and beryllium. The critical mineral concession block has been procured through Deccan Gold FZCO, a wholly-owned subsidiary of DGML. DGFZCO will hold a majority ownership stake of 51% in DGMOZ, with the potential for this ownership to increase to 70% in the near...
Read more

Small Cap Gem: Sakuma Exports Doubles in 2024, Bonus Share Proposal on July 1st?

By -
Image
Sakuma Exports: A Smallcap Stock with Big Returns in 2024 In the world of stock trading, smallcap stocks often go unnoticed. However, one such stock has been making waves in the Indian stock market - Sakuma Exports Ltd. This company, engaged in the buying, processing, marketing, exporting, and importing of agricultural products, has seen its share price double in the calendar year 2024. {jistoc} $title={Table of Contents} A Stellar Performance As of Thursday, June 20, the Sakuma Exports stock price has recorded a nearly 100% year-to-date gain , hitting the day’s high of ₹37.86 apiece on the NSE. This impressive performance is not a sudden phenomenon but the result of a strong run over the past couple of months. The company's shares have been on a steady upward trajectory, reflecting the positive sentiment among investors. The surge in the stock price is a testament to the company's robust business model and its ability to deliver consistent growth. Bonus Issue ...
Read more

Simple Investing: It's Not Rocket Science (But It Takes More Than Luck)

By -
Image
Successful Investing: Simple, But Not Easy Disclaimer:  This blog post is for informational purposes only and should not be taken as financial advice. Always do your own research and consider seeking advice from a certified financial advisor before making any investment decisions. {jistoc} $title={Table of Contents} The Myth of Easy Wealth The bull market of the 1990s created a myth that the stock market was essentially a high-return savings account. This belief was fueled by the ease of access to financial information and the ability to trade stocks online. However, as many investors discovered when the bubble burst, if something looks too good to be true, it usually is. Investing requires more than just opening an online account and watching financial news. It requires a deep understanding of the market, the ability to analyze and interpret financial data, and the discipline to stick to your investment strategy even when the market is volatile. It also requires...
Read more