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Buy KNR Construction; target of Rs 280: Motilal Oswal

Motilal Oswal is bullish on KNR Construction has recommended buy rating on the stock with a target price of Rs 280 in its research report dated June 12, 2020.

June 15, 2020 / 08:00 AM IST
 
 
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Motilal Oswal 's research report on KNR Construction


Though 4QFY20 revenues were lower than expectation, KNR Construction (KNR) outperformed on operating margins yet again. Higher interest outflow and depreciation owing to mobilization of HAM projects, coupled with higher tax rate led to lower PAT (4QFY20/FY20: -29%/-18%). Order book (incl. L1) stood strong at INR79b, providing strong revenue visibility with OB/Rev ratio of 3.6x. -The net cash balance sheet coupled with pending proceeds from monetization of road assets, provides key competitive advantage in bidding for newer projects. KNR has time and again demonstrated its strong execution capability despite the financing challenges in the sector as dependency on bank financing is minimal.



Outlook


However, owing to the impact of COVID-19 related execution challenges in 1HFY21, we have cut our FY21E EPS by 25%, but raised FY22E EPS by 9%. We maintain our Buy rating with TP of INR280 (prior: INR270), based on Mar'22E EPS.

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For all recommendations report, click here

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first published: Jun 15, 2020 08:00 am

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