Accumulate KNR Constructions; target of Rs 302: Geojit

Geojit's research report on KNR Constructions

Order book continued to remain strong @ 2.1x TTM revenue and total outstanding order book stands at Rs3,587cr. During the quarter KNR has received an order of Rs451cr in the state of Telangana for irrigation works. However subdued trend in EPC order booking dragged the order book by-22% YoY. The management indicated that the inflow in Q2FY18 impacted due to issues related to land acquisition and GST led disruption. On the other hand, the company continues to maintain their order inflow target of Rs2,000cr to Rs2,500cr in FY18E which is a key trigger to monitor for re-rating. Consequently, we expect order intake to grow at a CAGR of 36% over FY17-19E.

Outlook

We value core business at a P/E of 18x on FY19E EPS and BOT projects at 1.2xP/B to arrive at SOTP target price Rs302 & revised our rating to Accumulate’ from ‘Buy’.

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