Mari Reports 42% Decline in Earnings

Staff Report:
Mari Energies (MARI) reported a 42% quarter-on-quarter decline in earnings, bringing them to Rs9.3 per share, primarily due to higher operating expenditures and increased royalty expenses.

The result was below market expectations, which had anticipated earnings in the range of Rs11-14 per share. Contrary to market predictions of Rs10-15 per share, the company did not declare any cash dividend for the first half of FY25.

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Operating expenditures rose to Rs15 billion, marking a 115% year-on-year increase and accounting for 37% of net sales in the second quarter of FY25, compared to 18% of net sales in the first quarter. Royalty expenses reached Rs8 billion, up 39% year-on-year, making up 19% of net sales in the second quarter, compared to 12% in the first quarter.

The rise in royalty expenses was attributed to the imposition of an additional 15% royalty on the Mari field starting in November 2024. Further clarity on the increase in operating expenditures is awaited.

The company’s effective tax rate was recorded at 25% in the second quarter of FY25, compared to 34% in the first quarter and 40% in the second quarter of FY24. The effective tax rate for the first half of FY25 stood at 31%.

For the first half of FY25, earnings totaled Rs25.32 per share, reflecting a 19% year-on-year decline, driven by an 8% drop in net sales, a 58% rise in operating expenses, and a 106% increase in exploration costs.

MARI is currently trading at FY26/27 price-to-earnings ratios of 7.3x and 6.8x, respectively.