Buy KNR Constructions; Target Of Rs 310: ICICI Direct
ICICI Direct is bullish on Info Edge (India) recommended buy rating on the stock with a target price of Rs 310 in its research report dated November 17, 2020.
Nov 20, 2020 / 11:48 AM IST
ICICI Direct's research report on KNR Constructions
KNR Constructions reported a better-than-expected performance during Q2FY21 with superior execution and margins leading to bottomline beat. Topline was up 10.1% YoY to Rs 601.2 crore. Operating profit remained at an elevated level at 20.6% (down 239 bps YoY but up 80 bps on adjusted basis) backed by higher proportion of revenues from HAM and high margin irrigation projects. Reported PAT fell 28.9% YoY to Rs 49.8 crore. We note that the company has booked net exceptional loss of Rs 11.2 crore mainly on account of a) write-offs in Walayar project (sold to Cube Highways) and on another project terminated by NHAI and b) net of arbitration award. Adjusted for the same, PAT was at Rs 61.1 crore (down 17.6% YoY).
Considering strong execution, best in class WC, monetisation of BOT/HAM assets, healthy balance sheet, strong return ratios, we maintain BUY on the stock with a revised SoTP TP of Rs 310. We will closely monitor irrigation receivables recovery that will be key catalyst for stock performance.
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