Buy KNR Construction; target of Rs 360: Motilal Oswal

Motilal Oswal's research report on KNR Construction

KNR Construction (KNRC) continued its robust performance with revenue growth of 26% YoY, surpassing our expectations by 8%. The order book (OB) was strong at INR116b (including recently won projects), with the OB/revenue ratio at 3.7x. Total pending receivables from Irrigation stood at INR7b, which the management expects to recover by end-FY22. The company is debt-free at the standalone level. The credit rating for long-term facilities was recently upgraded from IND AA- to IND AA, with a stable outlook.

Outlook

We raise our FY23/FY24 estimate by 9.1%/6.4% on account of better-than-expected operating performance. The TP has been increased to INR360 on a) 16x Sep'23E EPS for the EPC business and b) P/Inv of 1x on road assets. Maintain Buy.