Buy KNR Constructions; target of Rs 300: Motilal Oswal

Motilal Oswal's research report on KNR Constructions

In 3QFY25, KNR Constructions (KNRC) received certain arbitration claims. For a like-to-like comparison, we have adjusted the same in revenue, other income, other expenses, and total taxes for 3QFY25 and have shown them as exceptional items. KNRC’s 3Q revenue declined 22% YoY to ~INR7.1b (20% below our estimate). EBITDA declined 20% YoY to INR1.2b (our est. INR1.5b). EBITDA margin stood at 16.6% (+30bp YoY) vs. our estimate of 16.5%. The impact of weak execution was offset by higher other income and lower depreciation & interest expenses, which resulted in an APAT of INR903m (in line).

Outlook

We reiterate our BUY rating with a revised SoTP-based TP of INR300. We value the EPC business at a P/E of 14x on Sep’26E EPS and BOT assets at 1x investment value.