Neutral KNR Constructions; target of Rs 190: Motilal Oswal

Motilal Oswal's research report on KNR Constructions

KNR Constructions (KNRC)’s revenue dipped 42.4% YoY to ~INR4.9b in 2QFY26 (16% below our estimate). EBITDA margin contracted 520bp YoY to 10.9% in 2QFY26 (vs. our estimate of 13.4%). EBITDA dipped 61% YoY to INR536 (vs. our estimate of INR785m). In line with its weak operating performance, KNRC’s APAT decreased 81% YoY to INR INR279m (vs. our estimate of INR550m). During 1HFY26, KNRC’s revenue/EBITDA/APAT declined 42%/58%/69%. The company’s current order book stands at ~INR82b, excluding the recently won projects of ~INR5.3b

Outlook

We reiterate our Neutral rating on the stock with an SoTP-based TP of INR190. We value its EPC business at a P/E of 10x on FY28E EPS and its BOT assets at 1x investment value.