Buy KNR Constructions; target of Rs 318: HDFC Securities

HDFC Securities is bullish on KNR Constructions has recommended buy rating on the stock with a target price of Rs 318 in its research report dated May 30, 2023.

Broker Research

June 01, 2023 / 11:20 IST

Buy

26 Aug, 2025 12:21

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HDFC Securities' research report on KNR Constructions

KNR reported revenue/EBITDA/APAT of INR 11.8/2.1/1.3bn, beating our estimates on all fronts. It guided for FY24 revenue at INR 40bn+, with an EBITDA margin of 14-16% (better margin in H2FY24 vs. H1FY24). For FY23, it won projects worth INR 20.4bn vs. its guidance of INR 50bn and guided for an FY24 order inflow (OI) of INR 40-45bn. The order book (OB) as of Mar’23 stands at INR 88.7bn (~2.4x FY23 revenue). Given the aggressive competition, the company is looking at projects from different segments like state highways, metro, railways and irrigation. The balance HAM equity requirement is INR 4.4bn as of Mar’23, of which INR 2.6/1.6bn will be infused in FY24/25. With INR 0.4bn in Q4FY23, it incurred a capex of INR 1.4bn in FY23 and guided for a similar amount for FY24. The NWC days stood at 67 vs. 53 as of Dec’22. The irrigation receivables as of Mar’23 stood at INR 5bn vs. INR 6.5bn as of Dec’22. At the standalone level, KNR continues to enjoy a strong net cash position.

Outlook

We cut our estimates to factor in lower inflows and margins. We maintain BUY with a reduced TP of INR 318/sh (18x Mar-25E EPS, HAM 1x P/BV).

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