Buy KNR Constructions; target of Rs 310: Sharekhan

Sharekhan's research report on KNR Constructions

KNR Constructions Limited (KNR) reported a marginal miss on standalone operational performance. Stake sale transfer in SPVs boosted net profit, although adjusted net earnings still lagged. Management has retained its Rs. 4,000-5,000 crore order inflow target for FY2023, which is a tall ask, considering highly competitive bidding and delays in bid openings. Management has maintained its revenue guidance for FY2023 and FY2024. Order book at 2.3x TTM remains strong, although new project wins are critical for high growth post FY2024. Entry in railways and metro is being contemplated. Irrigation receivables tread lower q-o-q.

Outlook

We retain Buy on KNR with a revised PT of Rs. 310, rolling forward our valuation multiple to FY2025E earnings and considering healthy growth outlook for the sector.

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