KNR Constructions has target of Rs 88: H Agarwal

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Hitesh Agarwal See what other Experts & Brokerages are saying about KNR Constructions See messages about KNR Constructions KNR Construct BSE | NSE 13/02/12 Are Mutual Funds betting on KNR Construct?

Hitesh Agarwal , VP-Research of Angel Broking is of the view that KNR Constructions has target of Rs 88.

Agarwal told CNBC-TV18, "KNR Construction was recently listed. It is a small time player in the construction space but it is a diversified player in the construction space basically having presence in road transportation, engineering, irrigation and water management and urban infrastructure development. Increasing government focus on infrastructure augurs good for the company. The 11th plan envisages investment in infrastructure of over Rs 7, 40,000 crore. We believe considering the execution capabilities of KNR over the last many years, we think it would be one of the key beneficiaries of the same, which is visible in the kind of orders that the company is getting. The average ticket size of the order has increased from Rs 35 crore couple of years back to about Rs 65 crore now." 

He further added, "We believe the company will continue do very well over the next three-four years with an order book of Rs 1,500 crore which is almost equal to three times FY08 sales and the company is also bidding for projects under the NHDP (National Highway Development Programme) totaling to Rs 25,000 crore. Consider its strike rate; we see good visibility in the topline for the company over the next 3-4 years. The stock is available at less than 4 times FY10 earnings and price to book of 0.6. So overall we think this is a value play in the construction space and we have a target of Rs 88 on the stock."

Disclosure: Analyst personally does not hold the above stock but have recommended to the clients.