Tüpraş (TUPRS): Entering the high season with an attractive valuation

Outperform rating maintained with 49% upside potential: We maintain our Outperform rating for Tupras shares with an unchanged target price of TL188.00/share. After a 23% decline and underperformance relative to the BIST-100 index by 11% over the past 12 months, the shares now trade at attractive 3.7x and 2.8x EV/EBITDA multiples on our 2025 and 2026 forecasts, respectively. As we move into the high season, stronger diesel cracks and the recent rebound in gasoline cracks are expected to support Tupras’ profitability in 2Q25. While we assume the y/y normalization in refining margins to persist through the remainder of 2025 – albeit at a lower magnitude – we anticipate an improvement starting in 2026.

Trading at deep discount to global peers: According to Bloomberg data, Tupras shares trade at 43% average discount to peers on 2025-2026E EV/EBITDA, which we find unjustified. Tupras continues to benefit from its refineries with higher complexity relative to peers, a best-in-class refining margin profile, strategic proximity to crude feedstock sources and a favourable position in the diesel-deficient domestic market. Additionally, Tupras offers a compelling 12% dividend yield, which stands out relative to peers. We believe these strengths justify a valuation premium to peers.

No change in full year guidance despite headwinds: While 2025 is shaping up to be another challenging year for refineries amid ongoing trade tensions and margin pressures, Tupras has reaffirmed its full-year guidance of US$5–6/bbl in net refining margin and 90-95% capacity utilization rate (CUR). This is despite a soft start to the year with a US$4.1/bbl margin and 83% CUR in 1Q25. The guidance suggests expectations for higher utilization and improved margin capture for the remainder of the year, with early signs of this already visible in 2Q25.

Long-Term EBITDA guidance revised upwards: In its updated strategy presentation released in April 2025, Tupras raised its average annual EBITDA target for the 2025–2035 period from >US$1.0bn to >US$1.5bn, compared to its previous outlook published in 2021. The company now aims to reach US$1.7bn EBITDA by 2030, driven by contributions from zero-carbon electricity (US$160mn), sustainable aviation fuel (US$250mn), and green hydrogen (US$40mn), partially offset by a US$205mn reduction in refining EBITDA compared to 2024.Catalysts & Risks: Key catalysts include the possible removal of US sanctions against Iran, depreciation of TL as well as improvement in refining margins. On the other hand, volatility in FX rates & crude prices and weaker than expected refining margins are the major risks to consider.

Gedik Investment Research