Topline Revises Mari Earnings Down by 42%
Staff Report
Topline has revised down its earnings estimates for Mari Energies (MARI) by 31-42% during FY25-27 to Rs47.4/46.8/57.3 per share, primarily due to the downward revision in oil prices by 13% to US$65/barrel, and (2) a decline in production estimates by 4% and 7% in FY25 and FY26 due to RLNG surplus in the system.
Despite the decline in earnings, we upgrade our stance on MARI from Sell to HOLD as the stock has underperformed by 40% by losing 28% of its share price since Dec 16, 2024 compared to the market return of 12% during the same period. To recall, we issued a Sell call on MARI with a target price of Rs606 on Dec 18, 2024 when it was trading at Rs809.8, suggesting a downside of 25%. Our revised Jun-26 TP for the company is Rs618/share after incorporating above mentioned changes and the addition of Spinwam and Soho reserves.Mari Reports 42% Decline in Earnings
RLNG surplus weighs on production volumes: During 9MFY25, the company reported gas flows of 219,421 MMCF, down by 2% despite the addition of Shewa, Shawal and Takri fields during this period. The gas production in 4Q is expected to post further 1% QoQ decline despite the full quarter impact of Shewa and addition of a new field Pateji as gas curtailment by SNGPL has been affecting major fields like HRL etc. Production levels are projected to remain low until FY26.
However, a recovery in volumes is expected FY27 onwards, following the negotiation of the Pak-Qatar Sales & Purchases Agreement (SPA) in March 2026. We have assumed gas production flows of 800, 798 and 860 MMCFD in FY25, FY26, and FY27 respectively. Field wise production flows are given in slide 2.
Spinwam-1 Reserves Size looks encouraging: As per the recent analyst briefing presentation, the estimated reserves of Spinwam are 0.8TCF. The total flows from 4 different formations are reported around 127.6 mmcfd and 569 bbl/day. However, it is yet unclear whether production from all formations can be commenced simultaneously. We have assumed production from this field to be starting in 4QFY27 (2 years from the date of discovery).
Production to normalize in FY27: We have also assumed normalization in FY27 production levels considering that the government is expected to negotiate in favor of domestic E&P players with Qatar. Furthermore, the capex of US$ 300Mn being undertaken by fertilizer manufacturers will also help the HRL reservoir to arrest its annual field depletion rate of 4-6%.
Valuation: We upgrade our stance on MARI from SELL to “HOLD” following the 28% correction in the company share price since Dec 16, 2025. Our revised reserves-based TP after including reserves from the Spinwam and Soho fields is Rs618/share, suggesting total return of 1.1% (including dividend yield of 5.5%).
Key risks to earnings are (1) prolonged disruption in production (2) further reduction in global oil prices and (3) delay in production from new fields (Spinwam and Soho).
