Neutral KNR Constructions; target of Rs 160: Motilal Oswal

Neutral

Motilal Oswal's research report on KNR Constructions

KNR Constructions (KNRC)’s revenue declined ~17% YoY to ~INR5.8b during 3QFY26 (14% above our estimate). EBITDA margin contracted 1,140bp YoY to 5.2% (vs. our estimate of 12.5%) in 3QFY26. The margin was hit by a spike in subcontracting expenses. EBITDA dipped ~74% YoY to INR306 (against our estimate of INR644m) In line with weak operating performance, APAT decreased ~81% YoY to INR INR176m (against our estimate of INR 550m).

Outlook

We reiterate our Neutral rating on the stock with a revised SoTP-based TP of INR160. We value KNRC’s EPC business at a P/E of 9x on FY28E EPS and its BOT assets at 1x investment value.

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